The regulations in 7 CFR part 319 prohibit or restrict the importation into the United States of certain plants and plant products to prevent the introduction of plant pests and noxious weeds. The regulations in “Subpart—Nursery Stock, Plants, Roots, Bulbs, Seeds, and Other Plant Products,” §§ 319.37 through 319.37-14 (referred to below as the regulations) contain, among other things, prohibitions and restrictions on the importation of plants, plant parts, and seeds for propagation.

Paragraph (a) of § 319.37-8 of the regulations requires, with certain exceptions, that plants offered for importation into the United States be free of sand, soil, earth, and other growing media. This requirement is intended to help prevent the introduction of plant pests that might be present in the growing media; the exceptions to the requirement take into account factors that mitigate that plant pest risk. Those exceptions, which are found in paragraphs (b) through (e) of § 319.37-8, consider either the origin of the plants and growing media (paragraph (b)), the nature of the growing media (paragraphs (c) and (d)), or the use of a combination of growing conditions, approved media, inspections, and other requirements (paragraph (e)).

Paragraph (e) of § 319.37-8 provides conditions under which certain plants established in growing media may be imported into the United States. In addition to specifying the types of plants that may be imported, § 319.37-8(e) also:

• Specifies the types of growing media that may be used;

• Requires plants to be grown in accordance with written agreements between the Animal and Plant Health Inspection Service (APHIS) and the plant protection service of the country where the plants are grown and between the foreign plant protection service and the grower;

• Requires the plants to be rooted and grown in a greenhouse that meets certain requirements for pest exclusion and that is used only for plants being grown in compliance with § 319.37-8(e);

• Restricts the source of the seeds or parent plants used to produce the plants, and requires grow-out or treatment of parent plants imported into the exporting country from another country;

• Specifies the sources of water that may be used on the plants, the height of the benches on which the plants must be grown, and the conditions under which the plants must be stored and packaged; and

• Requires that the plants be inspected in the greenhouse and found free of evidence of plant pests no more than 30 days prior to the exportation of the plants.

A phytosanitary certificate issued by the plant protection service of the country in which the plants were grown that declares that the above conditions have been met must accompany the plants at the time of importation. These conditions have been used successfully to mitigate the risk of pest introduction associated with the importation into the United States of approved plants established in growing media.

Currently, Bromeliad plants of the genera Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea may only be imported into the United States as bare root plants, in accordance with § 319.37-2. The Governments of Belgium, Denmark, and the Netherlands have requested that importation into the United States of those plants be allowed under the provisions of § 319.37-8.

The regulations in § 319.37-8(g) provide that requests such as those made by the Governments of Belgium, Denmark, and the Netherlands be evaluated by APHIS using specific pest risk evaluation standards that are based on pest risk analysis guidelines established by the International Plant Protection Convention of the United Nations' Food and Agriculture Organization. Such analyses are conducted to determine the plant pest risks associated with each requested plant article and to determine whether or not APHIS should propose to allow the requested plant article established in growing media to be imported into the United States.

In accordance with § 319.37-8(g), APHIS has conducted the required pest risk analysis. The pest risk analysis can be viewed on the Internet on the Regulations.gov Web site or in our reading room. 1

In the pest risk analysis, titled “Importation of Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea in Growing Media, into the United States from Belgium, Denmark, and the Netherlands,” APHIS determined that there was only one quarantine pest that could potentially follow the import pathway: Fusarium oxysporum f. sp. aechmeae, which is present in Belgium. This organism was determined to have a low pest risk potential. The pest risk analysis therefore concluded that the safeguards in § 319.37-8(e) would allow the safe importation of Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea into the United States from Belgium, Denmark, and the Netherlands.

Under section 412(a) of the Plant Protection Act, the Secretary of Agriculture may prohibit or restrict the importation and entry of any plant or plant product if the Secretary determines that the prohibition or restriction is necessary to prevent the introduction into the United States or the dissemination within the United States of a plant pest or noxious weed.

The Secretary has determined that it is not necessary to prohibit the importation from Belgium, Denmark, and the Netherlands of Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea, provided that the plants are established in an approved growing medium and meet all other applicable conditions of § 319.37-8(e). This determination is based on the findings of the pest risk analysis and the Secretary's judgment that the application of the measures required under § 319.37-8(e) will prevent the introduction or dissemination of plant pests into the United States.

Accordingly, we are proposing to amend the regulations in § 319.37-8(e) by adding Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea from Belgium, Denmark, and the Netherlands to the list of plants established in an approved growing medium that may be imported into the United States. The plants would have to be produced, handled, and imported in accordance with the requirements of § 319.37-8(e) and be accompanied at the time of importation by a phytosanitary certificate issued by the plant protection service of the country in which the plants were grown that declares that those requirements have been met.

In “Subpart—Nursery Stock, Plants, Roots, Bulbs, Seeds, and Other Plant Products,” the footnotes are out of sequence. Currently, there is no footnote 7, and there are two footnotes 11. To correct these errors, we would redesignate some footnotes and revise one of them. Current footnotes 8 and 9 would be redesignated as 7 and 8, respectively. In § 319.37-8(e), current footnote 10, which indicates that Bromeliads imported into Hawaii are subject to postentry quarantine in accordance with § 319.37-7, would be redesignated as footnote 9. As Bromeliads, Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea imported into Hawaii from Belgium, Denmark, or the Netherlands would be subject to the same postentry quarantine requirement. Our proposed new entry to the list in § 319.37-8(e) would therefore include a new footnote 10 that would refer the reader back to newly redesignated footnote 9. Current footnote 11 in § 319.37-8(e) also refers the reader back to the footnote pertaining to postentry quarantine. We would revise footnote 11 to refer the reader to newly redesignated footnote 9, rather than to footnote 10, as it currently does. Finally, a footnote in § 319.37-13(a), now also designated, incorrectly, as footnote 11, would be redesignated as footnote 12.

This proposed rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

In accordance with 5 U.S.C. 603, we have performed an initial regulatory flexibility analysis, which is summarized below, regarding the economic effects of this proposed rule on small entities. Copies of the full analysis are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT or on the Regulations.gov Web site ( see ADDRESSES above for instructions for accessing Regulations.gov).

Based on the information we have, there is no reason to conclude that adoption of this proposed rule would result in any significant economic effect on a substantial number of small entities. However, we do not currently have all of the data necessary for a comprehensive analysis of the effects of this proposed rule on small entities. Therefore, we are inviting comments on potential effects. In particular, we are interested in determining the number and kind of small entities that may incur benefits or costs from the implementation of this proposed rule.

This proposed rule would amend the regulations governing the importation of plants and plant products by adding Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia, and Vriesea from Belgium, Denmark, and the Netherlands to the list of plants established in an approved growing medium that may be imported into the United States, subject to certain conditions.

APHIS does not expect the proposed rule to have a significant economic impact on a substantial number of small entities, as there are believed to be relatively few U.S. producers of Bromeliad plants, the entities who stand to be affected most by the rule. The initial regulatory flexibility analysis describes the proposed rule's expected small-entity impact and specifically seeks public comment on that expected impact, as only limited data were available for analysis. Most U.S. growers of Bromeliad plants are likely to be small entities under the Small Business Administration's standards.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this proposed rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.

To provide the public with documentation of APHIS' review and analysis of any potential environmental impacts associated with the importation of plants of the genera Aechmea, Cryptanthus, Guzmania, Hohenbergia, Neoregelia, Tillandsia and Vriesea, of the family Bromeliaceae, from Belgium, Denmark, and the Netherlands, we have prepared an environmental assessment. The environmental assessment was prepared in accordance with: (1) The National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et seq. ), (2) regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) APHIS' NEPA Implementing Procedures (7 CFR part 372).

The environmental assessment may be viewed on the Regulations.gov Web site or in our reading room. (A link to Regulations.gov and information on the location and hours of the reading room are provided under the heading ADDRESSES at the beginning of this proposed rule.) In addition, copies may be obtained by calling or writing to the individual listed under FOR FURTHER INFORMATION CONTACT .

This proposed rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Accordingly, we propose to amend 7 CFR part 319 as follows:

The regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-50, referred to below as the regulations) prohibit or restrict the importation of fruits and vegetables into the United States from certain parts of the world to prevent the introduction and dissemination of plant pests.

The national plant protection organization (NPPO) of the Republic of Korea (South Korea) has requested that the Animal and Plant Health Inspection Service (APHIS) amend the regulations to allow fresh tomatoes with stems ( Solanum lycopersicum L.) (synonym: Lycopersicon esculentum P. Mill.) to be imported into the United States. As part of our evaluation of South Korea's request, we prepared a pest risk assessment (PRA) and a risk management document (RMD). Copies of the PRA and RMD may be obtained from the person listed under FOR FURTHER INFORMATION CONTACT or viewed on the Regulations.gov Web site or in our reading room ( see ADDRESSES above for a link to Regulations.gov and information on the location and hours of the reading room).

The PRA, titled “Importation of Fresh Tomato Fruit with Stems ( Solanum lycopersicum L.) (Synonym: Lycopersicon esculentum P. Mill.) from the Republic of Korea into the United States” (July 2010), evaluates the risks associated with the importation of fresh tomatoes with stems into the United States from South Korea.

The PRA and supporting documents identified eight pests of quarantine significance present in South Korea that could be introduced into the United States through the importation of fresh tomatoes with stems. These include one fruit fly ( Bactrocera depressa ); four moths ( Heliocoverpa armigera, Heliocoverpa assulta, Mamestra brassicae, and Ostrinia furnacalis ); two thrips ( Scirtothrips dorsalis and Thrips palmi ); and a pathogen ( Ralstonia solanacearum race 3 biovar 2).

Although R. solanacearum race 3 biovar 2 was evaluated in the PRA as a pest of quarantine significance, we believe there is a low likelihood of the pathogen becoming introduced into the United States through the importation of fresh tomatoes with stems from South Korea. Currently, APHIS permits the importation of tomatoes and peppers for consumption from countries where R. solanacearum race 3 biovar 2 is known to occur. To date, no known introductions of R. solanacearum race 3 biovar 2 have occurred as a result of these importations. This supports the conclusion that even if R. solanacearum race 3 biovar 2 entered with fruit, there is a low likelihood of establishment. Therefore, we are proposing to allow the entry of fresh tomatoes with stems from South Korea into the United States subject to a port of entry inspection for R. solanacearum race 3 biovar 2.

APHIS has determined that measures beyond standard port-of-arrival inspections are required to mitigate the risks posed by the plant pests other than R. solanacearum race 3 biovar 2. Therefore, we are proposing to allow the importation of fresh tomatoes with stems from South Korea into the United States only if the tomatoes are produced under a systems approach. The systems approach would require that the tomatoes be grown in registered pest-exclusionary structures, would require trapping and monitoring inside and outside the pest-exclusionary structures for B. depressa, and would require packinghouse procedures designed to exclude the quarantine pests. Consignments of tomatoes with stems from South Korea would also be required to be accompanied by a phytosanitary certificate with an additional declaration stating that the tomatoes were grown in approved pest-exclusionary structures and were inspected and found free from quarantine pests of concern to the United States.

The tomatoes would have to be grown in pest-exclusionary structures that are registered with the NPPO of South Korea. The NPPO of South Korea and APHIS would have to jointly approve the pest-exclusionary structures. The pest-exclusionary structures would have to be equipped with double self-closing doors to prevent inadvertent introduction of pests into the pest-exclusionary structures. In addition, any vents or openings in the pest-exclusionary structures (other than the double self-closing doors) would have to be covered with screening 1.6 mm or smaller in order to prevent the entry of pests into the pest-exclusionary structure. The 1.6 mm maximum screening size is adequate to exclude most insect pests of quarantine significance named earlier in this docket. Although the thrips species are small enough to pass through the screening, they are at least partially discouraged by the physical barrier of the 1.6 mm mesh and the resultant reduced velocity of wind currents upon which they are borne. In addition, because thrips are external feeders, they would most likely be detected during inspection of the tomato fruit before shipment.

We would require that the pest-exclusionary structures be inspected monthly throughout the growing season (the months of March through November) by the NPPO of South Korea or its approved designee to ensure that phytosanitary and trapping procedures are employed to exclude plant pests and to verify that the screening is intact.

Trapping for B. depressa would be required both inside and outside the pest-exclusionary structures. Trapping would have to begin at least 2 months prior to the start of harvest and continue for the duration of the harvest. Both inside and outside traps would have to be serviced once per week.

APHIS-approved traps, with an APHIS-approved protein bait, would have to be placed inside the pest-exclusionary structures at a density of at least two traps per pest-exclusionary structure as well as within a 500-meter-wide buffer area around the registered pest-exclusionary structure at a density of one trap per 10 hectares. During the growing season at least one trap would have to be in the buffer area near each pest-exclusionary structure.

If a single B. depressa is found in a trap inside a pest-exclusionary structure, the NPPO of South Korea would have to immediately prohibit that pest-exclusionary structure from exporting tomatoes to the United States and notify APHIS of the action. The prohibition would remain in effect until the NPPO of South Korea and APHIS agree that the risk has been mitigated. If three B. depressa are found inside the buffer zone within 2 kilometers of each other within a 30-day period, the NPPO of South Korea would have to immediately prohibit all registered pest-exclusionary structures within 2 kilometers of the finds from exporting tomatoes to the United States and notify APHIS of the action. The prohibition would remain in effect until the NPPO of South Korea and APHIS agree that the risk has been mitigated.

The manager of the pest-exclusionary structure would have to maintain records of trap placement, trap servicing, and fruit fly captures for at least 1 year and must report on the trapping program and provide copies of trapping records to the NPPO of South Korea each month. These trapping records would have to be made available to APHIS for review upon request.

The tomatoes would have to be packed within 24 hours of harvest in a pest-exclusionary packinghouse. While packing the tomatoes for export to the United States, the packinghouse would only be allowed to accept tomatoes from registered pest-exclusionary structures. A random sample of fruit per lot, as determined by the NPPO of South Korea and agreed to by APHIS, would have to be inspected for external pests and the fruit cut to reveal internal pests. Each sample would have to be of a size sufficient to detect pest infestations. Inspection of cut fruit is effective at detecting fruit flies, such as B. depressa. Any damaged, diseased, or infested fruit would have to be removed and separated from the commodity destined for export to the United States. The tomatoes would have to be safeguarded by an insect-proof mesh, screen, or plastic tarpaulin while in transit from the production site to the packinghouse and while awaiting packing.

The tomatoes would have to be packed for shipment to the United States in insect-proof cartons or containers, or covered with insect-proof screen or plastic tarpaulin. These safeguards would have to remain intact until the arrival of the tomatoes in the United States or the consignment would not be allowed to enter the United States.

Only commercial consignments of tomatoes with stems from South Korea would be allowed to be imported into the United States. Produce grown commercially is less likely to be infested with plant pests than noncommercial consignments. Noncommercial consignments are more prone to infestations because the commodity is often ripe to overripe, could be of a variety with unknown susceptibility to pests, and is often grown with little or no pest control. Commercial consignments, as defined in § 319.56-2, are consignments that an inspector identifies as having been imported for sale and distribution. Such identification is based on a variety of indicators, including, but not limited to: Quantity of produce, type of packing, identification of grower or packinghouse on the packaging, and documents consigning the fruits or vegetables to a wholesaler or retailer.

To certify that the tomatoes have been produced in accordance with the mitigations described in this document, we would require that each consignment of tomatoes be accompanied by a phytosanitary certificate of inspection issued by the NPPO of South Korea bearing an additional declaration that reads “Tomatoes in this consignment were grown in pest-exclusionary structures in accordance with 7 CFR 319.56-51 and were inspected and found free of Bactrocera depressa, Helicoverpa armigera, Helicoverpa assulta, Mamestra brassicae, Ostrinia furnacalis, Scirtothrips dorsalis, and Thrips palmi. ”

These proposed provisions governing the importation of fresh tomatoes with stems from South Korea would be added to the regulations as a new § 319.56-51.

This proposed rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT or on the Regulations.gov Web site ( see ADDRESSES above for instructions for accessing Regulations.gov).

South Korea expects to export one 40-foot shipping container of fresh tomatoes with stems per year to the United States. A shipping container can hold about 25 metric tons (MT) of tomatoes with stems. In 2009, the United States produced 1.47 million MT of tomatoes, U.S. imports reached 1.19 million MT, and U.S. exports were 0.17 million MT. Thus, the total U.S. supply of tomatoes for this period was approximately 2.49 million MT (production plus imports minus exports). This quantity greatly dwarfs the relatively small amount that is expected to be imported from South Korea. Therefore, while the majority of domestic tomato farms are small, the impact of the proposed tomato imports from South Korea would be negligible.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities.

This proposed rule would allow fresh tomatoes with stems to be imported into the United States from South Korea. If this proposed rule is adopted, State and local laws and regulations regarding fresh tomatoes with stems imported under this rule would be preempted while the fruit is in foreign commerce. Fresh fruits are generally imported for immediate distribution and sale to the consuming public and would remain in foreign commerce until sold to the ultimate consumer. The question of when foreign commerce ceases in other cases must be addressed on a case-by-case basis. If this proposed rule is adopted, no retroactive effect will be given to this rule, and this rule will not require administrative proceedings before parties may file suit in court challenging this rule.

In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection or recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. APHIS-2010-0020. Please send a copy of your comments to: (1) Docket No. APHIS-2010-0020, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer, OCIO, USDA, room 404-W, 14th Street and Independence Avenue, SW., Washington, DC 20250. A comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication of this proposed rule.

We are proposing to amend the fruits and vegetables regulations to allow, under certain conditions, the importation into the United States of commercial shipments of tomatoes with stems from the Republic of Korea. The conditions for the importation of tomatoes with stems from the Republic of Korea include requirements for pest exclusion at the production site, fruit fly trapping inside and outside the production site, and pest-excluding packinghouse procedures. The tomatoes would also be required to be accompanied by a phytosanitary certificate issued by the national plant protection organization of the Republic of Korea with an additional declaration confirming that the tomatoes had been produced in accordance with the proposed requirements. This action would allow for the importation of tomatoes with stems from the Republic of Korea while continuing to provide protection against the introduction of injurious plant pests into the United States.

We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us:

(1) Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;

(2) Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

(3) Enhance the quality, utility, and clarity of the information to be collected; and

(4) Minimize the burden of the information collection on those who are to respond (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses).

Estimate of burden: Public reporting burden for this collection of information is estimated to average 2 hours per response.

Respondents: Foreign officials.

Estimated annual number of respondents: 2.

Estimated annual number of responses per respondent: 1.5.

Estimated annual number of responses: 3.

Estimated total annual burden on respondents: 6 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response.)

Copies of this information collection can be obtained from Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 851-2908.

The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this proposed rule, please contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 851-2908.

Accordingly, we propose to amend 7 CFR part 319 as follows:

The Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., makes it unlawful for creditors to discriminate in any aspect of a credit transaction on the basis of sex, race, color, religion, national origin, marital status, or age (provided the applicant has the capacity to contract), because all or part of an applicant's income derives from public assistance, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act. The Board's Regulation B (12 CFR part 202) implements the ECOA.

Section 701(d) of the ECOA generally requires a creditor to notify a credit applicant against whom it has taken an adverse action. Under section 701(d)(6) of the ECOA, an adverse action generally means a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested.

Section 615(a) of the FCRA also requires a person to provide an adverse action notice when the person takes an adverse action based in whole or in part on information in a consumer report. The definition of adverse action in section 603(k) of the FCRA incorporates, for purposes of credit transactions, the definition of adverse action under ECOA. The adverse action provisions in both the ECOA and the FCRA require certain disclosures to be given to consumers.

The ECOA adverse action provisions are implemented in Regulation B. There are no implementing regulations for the adverse action requirements of section 615(a) of the FCRA. However, as explained in comment 202.9(b)(2)-9 of Regulation B, certain model notices in Regulation B include the content required by both the ECOA and the FCRA, so that persons can use the model notices to comply with the adverse action requirements of both statutes.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was signed into law. Public Law 111-203, 124 Stat. 1376. Section 1100F of the Dodd-Frank Act amends section 615(a) of the FCRA to require creditors to disclose on FCRA adverse action notices a credit score used in taking any adverse action and information relating to that score. The effective date of these amendments is July 21, 2011. 1

The Board is proposing to amend those model adverse action notices in Regulation B which incorporate the content requirements of section 615(a) of the FCRA to reflect the new content requirements added by section 1100F of the Dodd-Frank Act. These revisions to the model notices will help facilitate uniform compliance when section 1100F of the Dodd-Frank Act becomes effective. Thus, pursuant to its authority in section 703(a) of the ECOA, the Board is proposing to amend certain adverse action model notices in Regulation B consistent with the requirements of section 1100F of the Dodd-Frank Act.

Under section 701(d) of the ECOA, a creditor must provide to applicants against whom adverse action is taken either: (1) A statement of reasons for taking the adverse action as a matter of course; or (2) a notification of adverse action which discloses the applicant's right to a statement of reasons within thirty days after receipt by the creditor of a request made by the applicant within sixty days after the written notification. Section 615(a) of the FCRA requires a person to provide in an adverse action notice information regarding the consumer reporting agency that furnished the consumer report used in taking the adverse action. It also requires a person to disclose that a consumer has a right to a free credit report and right to dispute the accuracy or completeness of any information in a consumer report.

Section 1100F of the Dodd-Frank Act amends section 615(a) of the FCRA to require that creditors disclose additional information on FCRA adverse action notices. Specifically, a person must disclose on a FCRA adverse action notice a credit score used in taking any adverse action and information relating to that score, in addition to the information currently required by section 615(a) of the FCRA. The statute generally requires that the FCRA adverse action notice include: (1) A numerical credit score used in making the credit decision; (2) the range of possible scores under the model used; (3) the key factors that adversely affected the credit score of the consumer in the model used; (4) the date on which the credit score was created; and (5) the name of the person or entity that provided the credit score.

As explained in paragraph 2 of Appendix C to part 202, model notices C-1 through C-5 may be used to comply with the adverse action provisions of both the ECOA and the FCRA. The Board proposes to amend model notices C-1 through C-5 to incorporate the additional content requirements prescribed by section 1100F of the Dodd-Frank Act.

Under the proposal, Forms C-1 through C-5 would be revised to include, as applicable, a statement that the creditor obtained the consumer's credit score from a consumer reporting agency named in the notice and used the score in making the credit decision. The notice would also state that a credit score is a number that reflects the information in the consumer's credit report and that the consumer's credit score can change, depending on how the information in the consumer's credit report changes. The model notices would also provide space for the creditor to include the content required under section 1100F of the Dodd-Frank Act that is specific to the consumer. This content includes: the consumer's credit score, the date the credit score was created, the range of possible credit scores under the model used, and up to four key factors that adversely affected the consumer's credit score (or up to five factors if the number of enquiries made with respect to that consumer report is one of the factors).

In addition to the content added to each of Forms C-1 through C-5, Form C-3 would be amended for clarity. Form C-3 is a model notice that can be used by creditors in circumstances where the creditor uses a proprietary credit scoring system to make a credit decision and where the creditor uses information from a consumer reporting agency in this scoring evaluation. As discussed above, section 1100F of the Dodd-Frank Act requires information regarding a credit score that is obtained from a consumer reporting agency to be included on an adverse action notice. The Board believes discussing two different types of credit scoring systems on Form C-3 could be confusing for consumers. Therefore, the Board proposes to amend Form C-3 to clarify the differences between a proprietary score and a credit score that is obtained from a consumer reporting agency. The text would clarify that the consumer's application was processed by a system that assigns a numerical value to the various items of information the creditor considers when evaluating the consumer's application. This numerical value is based upon analyses of repayment histories of the creditor's customers. The proposed form would also add topic headings to help distinguish the different types of scores that were used in making the credit decision. It would also remove the reference to credit scoring in the title of the form.

In some cases, a person who is required to provide an adverse action notice under the FCRA may use a consumer report, but not a credit score, in taking the adverse action. Under section 1100F of the Dodd-Frank Act, a person is not required to disclose a credit score and related information if a credit score is not used in taking the adverse action. Therefore, the amendments to Forms C-1 through C-5 are only applicable if a credit score is used in taking an adverse action. A person may amend, at its option, Form C-3 to add the additional headings and remove the reference to a credit scoring system, even if the person does not add the heading and information about the consumer's credit score.

The Board notes that section 1100F of the Dodd-Frank Act requires a creditor to provide, if applicable, a consumer's credit score and related information, regardless of whether it provides a statement of specific reasons for taking the adverse action or a disclosure of the applicant's right to a statement of specific reasons for an adverse action. Therefore, a creditor would not comply with the FCRA adverse action provisions by providing the required FCRA disclosures only if a consumer responds to a request for a statement of specific reasons for an adverse action. As a result, proposed Form C-5 reflects the requirement to provide the disclosures required by section 615(a) of the FCRA, including the consumer's credit score and the key factors that adversely affected the credit score, at the time a creditor provides a disclosure of the applicant's right to a statement of specific reasons for an adverse action.

The Board requests comment on whether the proposed revisions to the content of the adverse action model notices are appropriate. The Board also solicits comment on whether additional or different changes to the model notices should be adopted.

The Board also proposes to amend paragraph 2 of Appendix C, which discusses the disclosure requirements of section 615 of the FCRA that are contained in Forms C-1 through C-5. Paragraph 2 explains that Form C-1 contains the disclosures required by sections 615(a) and (b) of the FCRA, and Forms C-2 through C-5 contain only disclosures required by section 615(a) of the FCRA. Paragraph 2 also describes the circumstances under which a creditor must provide the section 615(a) disclosures or the section 615(b) disclosures.

The paragraph states that the combined ECOA-FCRA disclosures in Form C-1 through Form C-5 must state that a creditor obtained information from a consumer reporting agency. Consistent with section 1100F of the Dodd-Frank Act, the paragraph would be revised to state that the combined disclosure must also include, as applicable, a credit score used in taking adverse action along with related information. The paragraph would also be revised to clarify that information from a consumer reporting agency was considered in the credit decision.

The Board proposes to amend comment 9(b)(2)-9 to reflect the proposed changes to the adverse action model notices. Comment 9(b)(2)-9 addresses the combined ECOA-FCRA adverse action disclosures. The proposed amendment would clarify that the FCRA requires a creditor to disclose, as applicable, a credit score it used in taking adverse action along with related information, including the key factors that adversely affected the consumer's credit score. It would also eliminate a statement that is redundant.

The proposed amendment to comment 9(b)(2)-9 would also clarify that disclosing the key factors that adversely affected the consumer's credit score does not satisfy the ECOA requirement to disclose specific reasons for denying or taking other adverse action on an application or extension of credit. The Board recognizes that a key factor(s) that adversely affected the consumer's credit score may be the same as a specific reason(s) for denying credit or taking other adverse action. However, some specific reasons for taking adverse action may be unrelated to a consumer's credit score, such as reasons related to the consumer's income, employment, or residency. Therefore, the Board believes the disclosure of both the key factors that adversely affected the consumer's credit score and the specific reasons for denying credit or taking other adverse action is necessary to fulfill the separate requirements of the ECOA and the FCRA.

In accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the proposed rulemaking under the authority delegated to the Board by the Office of Management and Budget (OMB). The collection of information that is required by this proposed rulemaking is found in 12 CFR 202. In addition, as permitted by the PRA, the Board also proposes to extend for three years the current recordkeeping and disclosure requirements in connection with Regulation B. The Board may not conduct or sponsor, and an organization is not required to respond to, this information collection unless it displays a currently valid OMB control number. The OMB control number is 7100-0201.

Section 703(a)(1) of the Equal Credit Opportunity Act (15 U.S.C. 1691b(a)(1)) authorizes the Board to issue regulations to carry out the provisions of the Act. The purpose of the Act is to ensure that credit is made available to all creditworthy customers without discrimination on the basis of race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), receipt of public assistance income, or the fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act (15 U.S.C. 1600 et seq. ). This information collection is mandatory.

Regulation B applies to all types of creditors, not just State member banks. However, under the Paperwork Reduction Act, the Board accounts for the burden of the paperwork associated with the regulation only for entities that are supervised by the Board. Appendix A of Regulation B defines these creditors as State member banks, branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act. Other Federal agencies account for the paperwork burden for the institutions they supervise. Creditors are required to retain records for 12 to 25 months as evidence of compliance.

The current annual burden to comply with the provisions of Regulation B is estimated to be 157,538 hours for the 1,107 institutions  2 supervised by the Board that are deemed to be respondents for the purposes of the PRA.

As discussed above, the Board proposes to amend model notices C-1 through C-5 to incorporate the additional content requirements prescribed by section 1100F of the Dodd-Frank Act. In addition, the Board proposes to amend Form C-3 to clarify the differences between a proprietary score and a credit score that is obtained from a consumer reporting agency.

The Board estimates that the proposed rule would impose a one-time increase in the total annual burden under Regulation B. The 1,107 respondents would take, on average, 16 hours (two business days) to update their systems to comply with the disclosure requirements addressed in 12 CFR part 202. This one-time revision would increase the burden by 17,712 hours. The Board estimates that, on a continuing basis, the revision to the rule would have a negligible effect on the annual burden. The total annual burden for the Regulation B information collection is estimated to increase from 157,538 to 175,250 hours.

Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the Board's functions; including whether the information has practical utility; (2) the accuracy of the Board's estimate of the burden of the proposed information collection, including the cost of compliance; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of information collection on respondents, including through the use of automated collection techniques or other forms of information technology. Comments on the collection of information should be sent to Cynthia Ayouch, Acting Federal Reserve Clearance Officer, Division of Research and Statistics, Mail Stop 95-A, Board of Governors of the Federal Reserve System, Washington, DC 20551, with copies of such comments sent to the Office of Management and Budget, Paperwork Reduction Project (7100-0202), Washington, DC 20503.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) requires an agency either to provide an initial regulatory flexibility analysis with a proposed rule or certify that the proposed rule will not have a significant economic impact on a substantial number of small entities. The proposed regulations cover certain banks, other depository institutions, and non-bank entities that take adverse action against consumers. The Small Business Administration (SBA) establishes size standards that define which entities are small businesses for purposes of the RFA. 3 The size standard to be considered a small business is: $175 million or less in assets for banks and other depository institutions; and $7 million or less in annual revenues for the majority of non-bank entities that are likely to be subject to the proposed regulations. The Board requests public comment in the following areas.

The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) was signed into law on December 4, 2003. Public Law 108-159, 117 Stat. 1952. Section 311 of the FACT Act added section 615(h), 15 U.S.C. 1681m(h), to the Fair Credit Reporting Act (FCRA) to address risk-based pricing. Risk-based pricing refers to the practice of setting or adjusting the price and other terms of credit offered or extended to a particular consumer to reflect the risk of nonpayment by that consumer. Information from a consumer report is often used in evaluating the risk posed by the consumer. Creditors that engage in risk-based pricing generally offer more favorable terms to consumers with good credit histories and less favorable terms to consumers with poor credit histories.

Under section 615(h) of the FCRA, a person generally must provide a risk-based pricing notice to a consumer when the person uses a consumer report in connection with an extension of credit and, based in whole or in part on the consumer report, extends credit to the consumer on terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers. The risk-based pricing notice is designed primarily to improve the accuracy of consumer reports by alerting consumers to the existence of negative information in their consumer reports so that consumers can, if they choose, check their consumer reports for accuracy and correct any inaccurate information. The Board and the Commission (the Agencies) jointly published regulations implementing these risk-based pricing provisions on January 15, 2010 (75 FR 2724) (January 2010 Final Rule). The January 2010 Final Rule has a mandatory compliance date of January 1, 2011.

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) was signed into law. Public Law 111-203, 124 Stat. 1376. Section 1100F of the Dodd-Frank Act amends section 615(h) of the FCRA to require creditors to disclose in risk-based pricing notices a credit score used in making a credit decision and information relating to such credit score. The effective date of these amendments is July 21, 2011. 2

Title X of the Dodd-Frank Act also establishes a Bureau of Consumer Financial Protection (the Bureau), to which rulewriting authority for certain consumer protection laws will transfer. Section 1088(a)(9) of the Dodd-Frank Act amends section 615(h)(6) to provide that rulewriting authority for section 615(h) will transfer to the Bureau. Pursuant to section 1100H of the Dodd-Frank Act, however, this rulewriting authority does not transfer to the Bureau until July 21, 2011. 3 Thus, rulewriting authority for the risk-based pricing provisions of FCRA, including the amendments prescribed by section 1100F of the Dodd-Frank Act, will not be vested in the Bureau until the date that the section 1100F amendments become effective.

The Agencies believe it is important to have implementing regulations and revised model forms in place by July 21, 2011. This will help ensure that consumers receive consistent disclosures of credit scores and information relating to credit scores and will help facilitate uniform compliance when section 1100F of the Dodd-Frank Act becomes effective.

Accordingly, the Agencies are proposing amendments to the risk-based pricing rules that are consistent with section 1100F of the Dodd-Frank Act pursuant to their existing authority under section 615(h) of the FCRA. Section 615(h) gives the Agencies the authority to issue rules implementing the risk-based pricing provisions, and requires the Agencies to address in those rules the form, content, timing, and manner of delivery of risk-based pricing notices. In particular, section 615(h)(5) prescribes certain content requirements for the risk-based pricing notices, but provides that the required content elements are the minimum that must be disclosed. Moreover, section 615(h)(6)(B)(iv) provides that the Agencies must provide a model notice that can be used to comply with section 615(h). Therefore, the Agencies have the authority to add content to the risk-based pricing notices that they deem appropriate. The Agencies believe that adding to the requirements for the risk-based pricing notice the content required by section 1100F of the Dodd-Frank Act and providing revised model notices is appropriate to avoid consumer confusion and to ensure timely and consistent compliance with the new content provisions.

Section 615(h) of the FCRA requires a person to include certain information in a risk-based pricing notice. The January 2010 Final Rule implements the general content requirements for risk-based pricing notices in § 222.72(a)(1) and § 640.4(a)(1) (hereafter “general risk-based pricing notice”). The January 2010 Final Rule also sets forth the content requirements for any risk-based pricing notice required to be given as a result of the use of a consumer report in an account review in § 222.72(a)(2) and § 640.4(a)(2) (hereafter “account review notice”).

Pursuant to section 615(h) of the FCRA, the January 2010 Final Rule provides that a general risk-based pricing notice must include a statement that the person sending the notice has set the terms of credit offered, such as the annual percentage rate, based on information from a consumer report, and a statement that those terms may be less favorable than the terms offered to consumers with better credit histories. Similarly, the January 2010 Final Rule provides that the account review notice must include a statement that the person sending the notice has conducted a review of the account based in whole or in part on information from a consumer report, and a statement that as a result of that review the annual percentage rate on the account has been increased. The January 2010 Final Rule also requires a person to provide certain information about the consumer reporting agency that furnished a consumer report and about the consumer's right to a free consumer report. The January 2010 Final Rule also provides that the general risk-based pricing notice and the account review notice must encourage consumers to verify the accuracy of the information in their consumer reports.

Section 1100F of the Dodd-Frank Act amends section 615(h) of the FCRA to require that creditors disclose additional information in risk-based pricing notices. Specifically, a person must disclose in a risk-based pricing notice a credit score used in making a credit decision and information relating to such credit score, in addition to the information currently required by section 615(h) of the FCRA. Section 1100F of the Dodd-Frank Act requires that a risk-based pricing notice include: (1) A numerical credit score used in making the credit decision; (2) the range of possible scores under the model used; (3) the key factors that adversely affected the credit score of the consumer in the model used; (4) the date on which the credit score was created; and (5) the name of the person or entity that provided the credit score.

Pursuant to section 615(h) of the FCRA, proposed __.73(a)(1) and (a)(2) would amend the content requirements of the general risk-based pricing notice and the account review notice, consistent with section 1100F of the Dodd-Frank Act. Proposed __.73(a)(1)(ix) would require a person to provide the additional content described above in a general risk-based pricing notice if a credit score of the consumer to whom a person grants, extends, or otherwise provides credit is used in setting the material terms of credit. Similarly, proposed __.73(a)(2)(ix) would require a person to provide the additional content described above in an account review notice if a credit score of the consumer whose extension of credit is under review is used in increasing the annual percentage rate.

Section 1100F of the Dodd-Frank Act requires a risk-based pricing notice to include a disclosure of a credit score used by a person in making the credit decision. However, a person who is required to provide a general risk-based pricing notice or account review notice may use a credit report to set the credit terms offered or extended to consumers without using a credit score. In a case where a person does not use a credit score in making the credit decision requiring a risk-based pricing notice or account review notice, the person would not be required to disclose a credit score and information relating to a credit score in such a notice.

In some cases, a creditor may use the credit score of a guarantor, co-signer, surety, or endorser, but not a credit score of the consumer to whom it extends credit or whose extension of credit is under review. Proposed __.73(a)(1)(ix) and __.73(a)(2)(ix) would only require a person to disclose a credit score and information relating to a credit score when using the credit score of the consumer to whom it grants, extends, or otherwise provides credit or whose extension of credit is under review. As discussed in the January 2010 Final Rule, a person is not required to provide a risk-based pricing notice to a guarantor, co-signer, surety, or endorser. 4 A person may be required, however, to provide a risk-based pricing notice to the consumer to whom it grants, extends, or otherwise provides credit, even if the person only uses the credit report or credit score of the guarantor, co-signer, surety, or endorser.

The Agencies do not believe the credit score of one consumer, such as a guarantor, co-signer, surety, or endorser, should be disclosed to a different consumer who is required to be given a risk-based pricing notice. Therefore, when a person only uses a credit score of a guarantor, co-signer, surety, or endorser to set the terms of credit for the consumer to whom it extends credit or whose extension of credit is under review, the proposal would not require a credit score to be provided in the general risk-based pricing notice or account review notice.

In those situations where a person must provide a credit score and information relating to a credit score to a consumer in a general risk-based pricing notice or an account review notice, §§ __.73(a)(1)(ix)(B)-(F) and __.73(a)(2)(ix)(B)-(F) of the proposed rules would require the following disclosures: (1) the credit score  5 used by the person in making the credit decision; (2) the range of possible credit scores under the model used to generate the credit score; (3) all of the key factors that adversely affected the credit score, which shall not exceed four factors, except that if one of the key factors is the number of inquires made with respect to the consumer report, the number of key factors shall not exceed five; (4) the date on which the credit score was created; and (5) the name of the consumer reporting agency or other person that provided the credit score. In addition, to provide context for the additional content requirements, proposed §§ __.73(a)(1)(ix)(A) and __.73(a)(2)(ix)(A) also would require a statement that a credit score is a number that takes into account information in a consumer report and that a credit score can change over time to reflect changes in the consumer's credit history.

The Agencies request comment as to whether the proposed additional content for general risk-based pricing notices and account review notices in the proposed rules is appropriate.

Finally, the Agencies note that the January 2010 Final Rule provides exceptions to the requirements to provide general risk-based pricing notices for persons that provide credit score disclosure exception notices to consumers who request credit. See §§ 222.74(d), (e), and (f); §§ 640.5(d), (e), and (f). Nothing in section 1100F of the Dodd-Frank Act or this proposal limits the ability of creditors to provide these exception notices in lieu of the general risk-based pricing notice.

The Agencies provide model forms that may be used for compliance with the risk-based pricing requirements in Appendix H of the January 2010 Final Rule. Paragraph (b)(2) of the January 2010 Final Rule clarifies how each of the model forms of the risk-based pricing notices required by §§ __.72(a) and (c), and by § __.72(d) may be used. Paragraph (b)(2) provides that appropriate use of the model forms contained in Appendices H-1 and H-2 of the Board's rules and Appendices B-1 and B-2 of the Commission's rules are deemed to be in compliance with §§ __.72(a) and (c), and § __.72(d), respectively. Use of these model forms is optional.

Under the proposal, the Agencies would amend Appendices H and B of the January 2010 Final Rule to add two new model forms in Appendices H-6 and H-7 of the Board's proposed rules and Appendices B-6 and B-7 of the Commission's proposed rules, for situations where a credit score and information relating to such credit score must be disclosed. See Model Forms, below. Proposed paragraph (b)(2) would clarify that appropriate use of Model Form H-1 or H-6, or B-1 or B-6, would be deemed to comply with the requirements of the requirements of § __.72(a) and (c). It would also clarify that appropriate use of Model Form H-2 or H-7, or B-2 or B-7, would be deemed to comply with the requirements of § __.72(d).

Some creditors may obtain multiple credit scores from consumer reporting agencies in connection with their underwriting processes. A creditor may use one or more of those scores in setting the material terms of credit. Section 1100F of the Dodd-Frank Act only requires a person to disclose a single credit score that is used by the person in making the credit decision. The Agencies are proposing § __.73(d) to address situations where a creditor obtains multiple credit scores from consumer reporting agencies and must provide either a general risk-based pricing notice or an account review notice to a consumer.

Proposed § __.73(d)(1) provides that when a person uses one of those credit scores in setting the material terms of credit, for example, by using the low, middle, high, or most recent score, the general risk-based pricing and account review notices would be required to include that credit score and information relating to that credit score as required by proposed §§ __.73(a)(1)(ix) and (a)(2)(ix). When a person uses two or more credit scores in setting the material terms of credit, for example, by computing the average of all the credit scores obtained, the notices would be required to include any one of those credit scores and information relating to the credit score as required by proposed §§ __.73(a)(1)(ix) and (a)(2)(ix). The notice may, at the person's option, include more than one credit score, along with the information specified in proposed §§ __.73(a)(1)(ix) and (a)(2)(ix) for each credit score disclosed.

Proposed § ___.73(d)(2) provides examples to illustrate the notice requirements for creditors that obtain multiple credit scores from consumer reporting agencies. The first example described in proposed § __.73(d)(2)(i) applies when a person that uses consumer reports to set the material terms of credit cards granted, extended, or provided to consumers regularly requests credit scores from several consumer reporting agencies and uses the low score when determining the material terms it will offer to the consumer. Under the proposed rules, that person must disclose the low score in its notices. The example described in proposed § __.73(d)(2)(ii) applies when a person that uses consumer reports to set the material terms of automobile loans granted, extended, or provided to consumers regularly requests credit scores from several consumer reporting agencies, each of which it uses in an underwriting program in order to determine the material terms it will offer to the consumer. Under the proposal, that person may choose any one of these scores to include in its notices.

The proposed rules would amend § __.75(c) to address circumstances where a person must provide multiple consumers, such as co-borrowers, with a risk-based pricing notice in a transaction. The proposed rules retain the rule of construction that clarifies that in a transaction involving two or more consumers who are granted, extended, or otherwise provided credit, a person must provide a risk-based pricing notice to each consumer. The proposed rules, however, would amend the rules addressing the provision of a risk-based pricing notice when the consumers have the same address and when the consumers have different addresses to account for situations where a risk-based pricing notice contains a consumer's credit score.

Proposed § __.75(c)(1) provides that whether the consumers have the same address or not, the person must provide a separate notice to each consumer if a notice includes a credit score(s). Each separate notice that includes a credit score(s) must contain only the credit score(s) of the consumer to whom the notice is provided, and not the credit score(s) of the other consumer. If the consumers have the same address, and the notice does not include a credit score(s), a person may satisfy the requirements by providing a single notice addressed to both consumers.

The proposed rules would also amend § __.75(c)(3)(i) to provide an example to illustrate the notice requirements when a person must provide a risk-based pricing notice that includes credit score information to multiple consumers. Proposed § __.75(c)(3)(i) would clarify that, in a situation where two consumers jointly apply for credit with a creditor and the credit decision is based in part on the consumers' credit scores, a separate risk-based pricing notice must be provided to each consumer whether the consumers have the same address or not. Each separate risk-based pricing notice must contain the credit score(s) of the consumer to whom the notice is provided.

Appendix H of the Board's rules and Appendix B of the Commission's rules contain five model forms that the Agencies prepared to facilitate compliance with the rules. Two of the model forms are for risk-based pricing notices, and three of the model forms are for the credit score disclosure exceptions. Each of the model forms is designated for use in a particular set of circumstances as indicated by the title of that model form. Model forms H-1 and B-1 are for use in complying with the general risk-based pricing notice requirements in § __.72. Model forms H-2 and B-2 are for use in complying with the risk-based pricing notices given in connection with account review in § __.72.

The proposed rules would add two new forms that could be used when a person must disclose credit score information to a consumer. Model forms H-6 and B-6 set forth a risk-based pricing notice with credit score information that could be used to comply with the general risk-based pricing requirements if the additional content requirements of § __.73(a)(1)(ix) apply. Model forms H-7 and B-7 set forth an account review risk-based pricing notice with credit score information that could be used to comply with the account review notice requirements if the additional content requirements of § __.73(a)(2)(ix) apply.

The Agencies request comment on the design and content of these model forms. The Agencies specifically solicit comment on the ordering of the content in Model Forms H-6 and H-7, and B-6 and B-7, and whether the credit score and information relating to a credit score should be presented prior to the information on credit reports.

Model forms H-1 and H-2, and B-1 and B-2 would be retained. The general risk-based pricing and account review notices could continue to be used to comply with § __.72 when the additional content requirements discussed in §§ __.73(a)(1)(ix) and (a)(2)(ix) do not apply. As with the other model forms, use of the model forms H-6 or H-7, or B-6 or B-7, by creditors would be optional. If a creditor appropriately uses Model Form H-6 or H-7, or B-6 or B-7, or modifies a form in accordance with the rules or the instructions to the appendix, that creditor would be deemed to be acting in compliance with the general risk-based pricing notice or account review requirement when the content provisions of §§ __.73(a)(1)(ix) or (a)(2)(ix) apply.

Finally, the proposal would amend instructions 1. and 2. to Appendices H and B to reflect the addition of H-6 and H-7, and B-6 and B-7.

In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3512; 5 CFR part 1320, Appendix A.1), the Board and the Commission may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.

In accordance with the PRA, the Board has reviewed the proposed rule under the authority delegated by OMB. The proposed rule contains requirements subject to the PRA. The collections of information that would be required by this proposed rule are found in 12 CFR 222.73(a)(1) and (a)(2). The Board's OMB control number is 7100-0308. 6

The information collection requirements contained in this joint notice of proposed rulemaking will be submitted by the Commission to OMB for review and approval under the PRA. 7 The requirements are found in 16 CFR 640.4(a)(1) and (a)(2).

Comments are invited on:

(a) Whether the collection of information is necessary for the proper performance of the Agencies' functions, including whether the information has practical utility;

(b) The accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected;

(d) Ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation, maintenance, and purchase of services to provide information.

All comments will become a matter of public record.

Comments should be addressed to:

Board: You may submit comments, identified by Docket No. R-1407 and RIN No. RIN 7100-AD66, by any of the following methods:

• Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

• E-mail: regs.comments@federalreserve.gov. Include docket number in the subject line of the message.

• FAX: 202-452-3819 or 202-452-3102.

• Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551. All public comments are available from the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.

Commission: Comments should refer to “FCRA Risk-Based Pricing Rule Amendments: Project No. R411009,” and may be submitted by any of the following methods. However, if the comment contains any material for which confidential treatment is requested, it must be filed in paper form, and the first page of the document must be clearly labeled “Confidential.”  8

• Web site: Comments filed in electronic form should be submitted by clicking on the following Web link: https://ftcpublic.commentworks.com/ftc/riskbasedpricingamendnprm and following the instructions on the Web-based form. To ensure that the Commission considers an electronic comment, you must file it on the Web-based form at https://ftcpublic.commentworks.com/ftc/riskbasedpricingamendnprm.

• Federal eRulemaking Portal: If this notice appears at http:// www.regulations.gov, you may also file an electronic comment through that Web site. The Commission will consider all comments that regulations.gov forwards to it.

• Mail or Hand Delivery: A comment filed in paper form should include “FCRA Risk-Based Pricing Rule Amendments: Project No. R411009,” both in the text and on the envelope and should be mailed or delivered, with two complete copies, to the following address: Federal Trade Commission/Office of the Secretary, Room H-113 (Annex M), 600 Pennsylvania Avenue, NW., Washington, DC 20580. The Commission is requesting that any comment filed in paper form be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington, DC area and at the Commission is subject to delay due to heightened security precautions.

Comments on any proposed filing, recordkeeping, or disclosure requirements that are subject to paperwork burden review under the Paperwork Reduction Act should additionally be submitted to: Office of Management and Budget, Attention: Desk Officer for the Federal Trade Commission. Comments should be submitted via facsimile to (202) 395-6974 because U.S. Postal Mail is subject to lengthy delays due to heightened security precautions.

The FTC Act and other laws the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. All timely and responsive public comments, whether filed in paper or electronic form, will be considered by the Commission, and will be available to the public on the Commission's Web site, to the extent practicable, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the Commission makes every effort to remove home contact information for individuals from the public comments it receives before placing those comments on the Commission's Web site. More information, including routine uses permitted by the Privacy Act, may be found in the Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Title of Information Collection: Fair Credit Reporting Risk-Based Pricing Notice Amendments.

Frequency of Response: On occasion.

Affected Public: Any person that is required to provide a risk-based pricing notice and uses a credit score in making the credit decision requiring a risk-based pricing notice.

Board: For purposes of the PRA, the Board is estimating the burden for entities regulated by the Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Office of Thrift Supervision, National Credit Union Administration, and the U.S. Department of Housing and Urban Development (collectively, the “Federal financial regulatory agencies”). Such entities may include, among others, State member banks, national banks, insured nonmember banks, savings associations, Federally-chartered credit unions, and other mortgage lending institutions.

Commission: For purposes of the PRA, the Commission is estimating the burden for entities that extend credit to consumers for personal, household, or family purposes, and are subject to administrative enforcement by the FTC pursuant to section 621(a)(1) of the FCRA (15 U.S.C. 1681s(a)(1)). These businesses include, among others, non-bank mortgage lenders, consumer lenders, utilities, State-chartered credit unions, and automobile dealers and retailers that directly extend credit to consumers for personal, non-business uses.

Abstract: As discussed above, §§ __.73(a)(1)(ix)(B)-(F) and ___.73(a)(2)(ix)(B)-(F) of the proposed rules would require the following disclosures: (1) the credit score  9 used by the person in making the credit decision; (2) the range of possible credit scores under the model used to generate the credit score; (3) all of the key factors that adversely affected the credit score, which shall not exceed four factors, except that if one of the key factors is the number of inquiries made with respect to the consumer report, the number of key factors shall not exceed five; (4) the date on which the credit score was created; and (5) the name of the consumer reporting agency or other person that provided the credit score. In addition, proposed §§ __.73(a)(1)(ix)(A) and ___.73(a)(2)(ix)(A) also would require a statement that a credit score is a number that takes into account information in a consumer report and that a credit score can change over time to reflect changes in the consumer's credit history.

Estimated Burden: To ease creditors' burden and cost of complying with the notice and disclosure requirements, the Agencies have provided draft model forms in Appendices H and B of the proposed regulations.

Board: The Board believes that since financial institutions are familiar with the existing provisions of section 615(h) of the FCRA, which require risk-based pricing disclosures when a person uses a consumer report in setting the material terms of credit, implementation of the proposed requirements should not be overly burdensome. The proposed requirements would require a person to add information to a disclosure that it is already providing to a consumer.

The Board estimates that there are 18,173 respondents regulated by the Federal financial regulatory agencies potentially affected by the new disclosure requirements. The Board estimates that the 18,173 respondents would take, on average, 16 hours (2 business days) to update their systems and modify model notices to comply with proposed requirements. This one-time annual burden is estimated to be 290,768 hours. The Board believes that, on a continuing basis, the revision to the rule would have a negligible effect on the annual burden.

Commission:

Number of respondents:

As discussed above, the proposed requirements would require a person that is required to provide a risk-based pricing notice and uses a credit score in making the credit decision requiring a risk-based pricing notice to add information to that disclosure.

Given the broad scope of creditors, it is difficult to determine precisely the number of them that are subject to the Commission's jurisdiction and that engage in risk-based pricing and use a credit score in making the credit decision requiring a risk-based pricing notice. As a whole, the entities under the Commission's jurisdiction are so varied that there are no general sources that provide a record of their existence, and they include many small entities for which there is no formal tracking method. Nonetheless, Commission staff estimates that the proposed regulations will affect approximately 199,500 creditors subject to the Commission's jurisdiction. 10 The Commission invites comment and information about the categories and number of creditors subject to its jurisdiction.

Estimated Hours Burden: As detailed below, Commission staff estimates that respondents would require, on average, 16 hours (two business days) to update their systems and modify model notices to comply with the proposed requirements. Thus, based on an estimated 199,500 respondents, the one-time burden, annualized for a 3 year PRA clearance, would be 1,064,000 hours [(16 × 199,500) ÷ 3]. The Commission believes that, on a continuing basis, the revision to the rule would have a negligible effect on the annual burden.

Estimated Cost Burden: Commission staff derived labor costs by applying appropriate estimated hourly cost figures to the burden hours described above. It is difficult to calculate with precision the labor costs associated with the proposed regulations, as they entail varying compensation levels of clerical, management, and/or technical staff among companies of different sizes. In calculating the cost figures, Commission staff assumes that managerial and/or professional technical personnel will update systems for providing risk-based pricing notices and adapt the written notices as necessary at an hourly rate of $42.95. 11 Based on the above estimates and assumptions, the estimated one-time labor cost for all categories of FTC covered entities under the proposed regulations, annualized for a 3 year PRA clearance, is $45,698,800 [((16 hours × $42.95) × 199,500) ÷ 3].

Commission staff does not anticipate that compliance with the proposed amendments will require any new capital or other non-labor expenditures. The proposed amendments provide a simple and concise model notice that creditors may use to comply, and as creditors already are providing risk-based pricing notices to consumers under the FCRA, they already have the necessary resources to generate and distribute these notices. Thus, any capital or non-labor costs associated with compliance would be negligible.

Board: The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) requires an agency either to provide an initial regulatory flexibility analysis with a proposed rule or certify that the proposed rule will not have a significant economic impact on a substantial number of small entities. The proposed regulations cover certain banks, other depository institutions, and non-bank entities that extend credit to consumers. The Small Business Administration (SBA) establishes size standards that define which entities are small businesses for purposes of the RFA. 12 The size standard to be considered a small business is: $175 million or less in assets for banks and other depository institutions; and $7 million or less in annual revenues for the majority of non-bank entities that are likely to be subject to the proposed regulations. The Board requests public comment in the following areas.

Section 1100F of the Dodd-Frank Act amends section 615(h) of the FCRA to require persons to disclose a credit score and information relating to that credit score in risk-based pricing notices when the person uses a credit score in setting the material terms of credit. Specifically, a person must disclose, in addition to the information currently required by the January 2010 Final Rule: (1) A numerical credit score used in making the credit decision; (2) the range of possible scores under the model used; (3) the key factors that adversely affected the credit score of the consumer in the model used; (4) the date on which the credit score was created; and (5) the name of the person or entity that provided the credit score. The effective date of these amendments is July 21, 2011.

The Agencies are issuing proposed amendments to the risk-based pricing rules pursuant to their existing authority under section 615(h) of the FCRA to facilitate compliance with the new requirements under section 1100F of the Dodd-Frank Act.

The SUPPLEMENTARY INFORMATION above contains this information. The legal basis for the proposed regulations is section 615(h) of the FCRA. The proposed regulations are consistent with section 1100F of the Dodd-Frank Act.

The proposed regulations apply to any person that (1) is required to provide a risk-based pricing notice to a consumer; and (2) uses a credit score in making the credit decision requiring a risk-based pricing notice. The total number of small entities likely to be affected by the proposal is unknown because the Agencies do not have data on the number of small entities that use credit scores for risk-based pricing in connection with consumer credit. The risk-based pricing provisions of section 1100F of the Dodd-Frank Act have broad applicability to persons who use credit scores for risk-based pricing in connection with the provision of consumer credit.

Based on estimates compiled by the Board, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, there are approximately 9,585 depository institutions that could be considered small entities and that are potentially subject to the proposed rule. 13 The available data are insufficient to estimate the number of non-bank entities that would be subject to the proposed rule and that are small as defined by the SBA. Such entities would include non-bank mortgage lenders, auto finance companies, automobile dealers, other non-bank finance companies, telephone companies, and utility companies.

It also is unknown how many of these small entities that meet the SBA's size standards and are potentially subject to the proposed regulations use credit scores for risk-based pricing in connection with the provision of consumer credit. The proposed regulations do not impose any requirements on small entities that do not use credit scores for risk-based pricing in connection with consumer credit.

The Board invites comment regarding the number and type of small entities that would be affected by the proposed rule.

The compliance requirements of the proposed regulations are described in detail in the SUPPLEMENTARY INFORMATION above.

The proposed regulations generally require a person that is required to provide a risk-based pricing notice to a consumer and uses a credit score in making the credit decision to provide a credit score and information relating to that credit score in the notice, in addition to the information currently required by the January 2010 Final Rule. Pursuant to the January 2010 Final Rule, a person is currently required to determine if it engages in risk-based pricing, based in whole or in part on consumer reports, in connection with the provision of consumer credit. If the person does engage in risk-based pricing based on consumer reports, the person generally is required to establish procedures for identifying those consumers to whom it must provide risk-based pricing notices.

A person that is required to provide risk-based pricing notices to certain consumers would need to analyze the regulations. The person would need to determine whether it used credit scores for risk-based pricing of the consumers to whom it must provide risk-based pricing notices. Persons that use credit scores for risk-based pricing would need to provide a credit score and information relating to that credit score to those consumers to whom it must provide an risk-based pricing notice, in addition to the information currently required by the January 2010 Final Rule. Persons would need to design, generate, and provide notices, including a credit score and information relating to that credit score, to the consumers to whom it must provide a risk-based pricing notice.

The Board seeks information and comment on any costs, compliance requirements, or changes in operating procedures arising from the application of the proposed rule to small institutions.

The Board has not identified any Federal statutes or regulations that would duplicate, overlap, or conflict with the proposed regulations. As discussed in Part III above, the proposed amendments to the risk-based pricing rules are consistent with section 1100F of the Dodd-Frank Act. The Agencies are proposing the rules pursuant to their existing authority under section 615(h) of the FCRA. The proposed amendments to the risk-based pricing rules have been designed to work in conjunction with the requirements of section 1100F of the Dodd-Frank Act to help facilitate uniform compliance when this section becomes effective. The Board seeks comment regarding any statutes or regulations, including State or local statutes or regulations, that would duplicate, overlap, or conflict with the proposed regulations.

The Board welcomes comments on any significant alternatives consistent with section 615(h) of the FCRA, including the provisions of section 1100F of the Dodd-Frank Act, that would minimize the impact of the proposed regulations on small entities.

Commission: The RFA, 5 U.S.C. 601-612, requires that the Commission provide an Initial Regulatory Flexibility Analysis (IRFA) with a proposed rule, unless the Commission certifies that the rule will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 603-605. The SBA establishes size standards that define which entities are small businesses for purposes of the RFA. 14 The size standard to be considered a small business is: $175 million or less in assets for banks and other depository institutions; and $7 million or less in annual revenues for the majority of non-bank entities that are likely to be subject to the proposed regulations. The Commission does not believe that the proposed regulations will have a significant economic impact on a substantial number of small business entities. The Commission recognizes that the proposed regulations will affect some small business entities; however we do not expect that a substantial number of small businesses will be affected or that the regulations will have a significant economic impact on them. Nonetheless, the Commission has prepared the following IRFA. The Commission requests public comment in the following areas.

Section 1100F of the Dodd-Frank Act amends section 615(h) of the FCRA to require persons to disclose a credit score and information relating to that credit score in risk-based pricing notices when the person uses a credit score in setting the material terms of credit. Specifically, a person must disclose, in addition to the information currently required by the January 2010 Final Rule: (1) A numerical credit score used in making the credit decision; (2) the range of possible scores under the model used; (3) the key factors that adversely affected the credit score of the consumer in the model used; (4) the date on which the credit score was created; and (5) the name of the person or entity that provided the credit score. The effective date of these amendments is July 21, 2011.

The Agencies are issuing proposed amendments to the risk-based pricing rules pursuant to their existing authority under section 615(h) of the FCRA to facilitate compliance with the new requirements under section 1100F of the Dodd-Frank Act.

The SUPPLEMENTARY INFORMATION above contains this information. The legal basis for the proposed regulations is section 615(h) of the FCRA. The proposed regulations are consistent with section 1100F of the Dodd-Frank Act.

The proposed regulations apply to any person that (1) is required to provide a risk-based pricing notice to a consumer; and (2) uses a credit score in making the credit decision requiring a risk-based pricing notice. The total number of small entities likely to be affected by the proposal is unknown because the Agencies do not have data on the number of small entities that use credit scores for risk-based pricing in connection with consumer credit. The risk-based pricing provisions of section 1100F of the Dodd-Frank Act have broad applicability to persons who use credit scores for risk-based pricing in connection with the provision of consumer credit.

The available data is not sufficient for the Commission to realistically estimate the number of small entities, as defined by the U.S. Small Business Administration (SBA), that the Commission regulates and that would be subject to the proposed rule. 15 The entities under the Commission's jurisdiction are so varied that there is no way to identify them in general and, therefore, no way to know how many of them qualify as small businesses. Generally, the entities under the Commission's jurisdiction that also are covered by section 1100F of the Dodd-Frank Act include State-chartered credit unions, non-bank mortgage lenders, auto dealers, and utility companies. The proposed regulations do not impose any requirements on small entities that do not use credit scores for risk-based pricing in connection with consumer credit.

The Commission invites comment regarding the number of and type of small entities that would be affected by the proposed rule.

The compliance requirements of the proposed regulations are described in detail in the SUPPLEMENTARY INFORMATION above.

The proposed regulations generally require a person that is required to provide a risk-based pricing notice to a consumer and uses a credit score in making the credit decision to provide a credit score and information relating to that credit score in the notice, in addition to the information currently required by the January 2010 Final Rule. Pursuant to the January 2010 Final Rule, a person is currently required to determine if it engages in risk-based pricing, based in whole or in part on consumer reports, in connection with the provision of consumer credit. If the person does engage in risk-based pricing based on consumer reports, the person generally is required to establish procedures for identifying those consumers to whom it must provide risk-based pricing notices.

A person that is required to provide risk-based pricing notices to certain consumers would need to analyze the regulations. The person would need to determine whether it used credit scores for risk-based pricing of the consumers to whom it must provide risk-based pricing notices. Persons that use credit scores for risk-based pricing would need to provide a credit score and information relating to that credit score to those consumers to whom it must provide risk-based pricing notice, in addition to the information currently required by the January 2010 Final Rule. Persons would need to employ the professional skills necessary to design, generate, and provide notices including a credit score and information relating to that credit score to the consumers to whom it must provide risk-based pricing notice.

The Commission seeks information and comment on any costs, compliance requirements, or changes in operating procedures arising from the application of the proposed rule to small institutions.

The Commission has not identified any Federal statutes or regulations that would duplicate, overlap, or conflict with the proposed regulations. As discussed in Part III above, the proposed amendments to the risk-based pricing rules are consistent with section 1100F of the Dodd-Frank Act. The Agencies are proposing the rules pursuant to their existing authority under section 615(h) of the FCRA. The proposed amendments to the risk-based pricing rules have been designed to work in conjunction with the requirements of section 1100F of the Dodd-Frank Act to help facilitate uniform compliance when this section becomes effective. The Commission seeks comment regarding any statutes or regulations, including State or local statutes or regulations, that would duplicate, overlap, or conflict with the proposed regulations.

The compliance requirements of the proposed regulations are described in detail in the SUPPLEMENTARY INFORMATION above.

The proposed regulations generally require a person that is required to provide a risk-based pricing notice to a consumer and uses a credit score in making the credit decision to provide a credit score and information relating to that credit score in the notice, in addition to the information currently required by the January 2010 Final Rule. Alternatively, a business may comply with the January 2010 Final Rule by providing consumers with a credit score disclosure notice. By providing a range of options, the Agencies have sought to help businesses of all sizes reduce the burden or inconvenience of complying with the proposed regulations.

Similarly, the proposed regulations provide a model notice to facilitate compliance. By using the model notice, creditors qualify for safe harbor. Creditors are not required to use the model notice, however. If they provide a notice that clearly and conspicuously conveys the required information, these creditors would comply with the requirements of the rule, though they would not receive the benefit of the safe harbor. Having this option provides creditors of all sizes with flexibility in how to comply with the proposed regulations.

Notwithstanding the Agencies' efforts to consider the impact of the proposed regulations on small entities, the Commission welcomes comments on any significant alternatives consistent with section 615(h) of the FCRA, including the provisions of section 1100F of the Dodd-Frank Act, that would minimize the impact of the proposed regulations on small entities.

Certain conventions have been used to highlight the proposed revisions. New language is shown inside ▸bold-type arrows◂ while language that would be deleted is set off with [ bold-type brackets ] .

For the reasons set forth in the joint preamble, the Board proposes to amend chapter II of title 12 of the Code of Federal Regulations by amending 12 CFR part 222, as follows:

For the reasons discussed in the joint preamble, the Federal Trade Commission proposes to amend chapter I, title 16, Code of Federal Regulations, as follows:

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-0220; Directorate Identifier 2010-NM-259-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

The European Aviation Safety Agency (EASA), which is the aviation authority for the Member States of the European Community, has issued EASA Airworthiness Directive 2010-0159, dated August 3, 2010 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

The FAA has examined the underlying safety issues involved in fuel tank explosions on several large transport airplanes, including the adequacy of existing regulations, the service history of airplanes subject to those regulations, and existing maintenance practices for fuel tank systems. As a result of those findings, we issued a regulation titled “Transport Airplane Fuel Tank System Design Review, Flammability Reduction and Maintenance and Inspection Requirements” (66 FR 23086, May 7, 2001). In addition to new airworthiness standards for transport airplanes and new maintenance requirements, this rule included Special Federal Aviation Regulation No. 88 (“SFAR 88,” Amendment 21-78, and subsequent Amendments 21-82 and 21-83).

Among other actions, SFAR 88 requires certain type design (i.e., type certificate (TC) and supplemental type certificate (STC)) holders to substantiate that their fuel tank systems can prevent ignition sources in the fuel tanks. This requirement applies to type design holders for large turbine-powered transport airplanes and for subsequent modifications to those airplanes. It requires them to perform design reviews and to develop design changes and maintenance procedures if their designs do not meet the new fuel tank safety standards. As explained in the preamble to the rule, we intended to adopt airworthiness directives to mandate any changes found necessary to address unsafe conditions identified as a result of these reviews.

In evaluating these design reviews, we have established four criteria intended to define the unsafe conditions associated with fuel tank systems that require corrective actions. The percentage of operating time during which fuel tanks are exposed to flammable conditions is one of these criteria. The other three criteria address the failure types under evaluation: Single failures, single failures in combination with a latent condition(s), and in-service failure experience. For all four criteria, the evaluations included consideration of previous actions taken that may mitigate the need for further action.

The Joint Aviation Authorities (JAA) has issued a regulation that is similar to SFAR 88. (The JAA is an associated body of the European Civil Aviation Conference (ECAC) representing the civil aviation regulatory authorities of a number of European States who have agreed to co-operate in developing and implementing common safety regulatory standards and procedures.) Under this regulation, the JAA stated that all members of the ECAC that hold type certificates for transport category airplanes are required to conduct a design review against explosion risks.

We have determined that the actions identified in this AD are necessary to reduce the potential of ignition sources inside fuel tanks, which, in combination with flammable fuel vapors, could result in fuel tank explosions and consequent loss of the airplane.

Fokker Services B.V. has issued Fokker Service Bulletin SBF100-28-050, Revision 1, dated July 28, 2010. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a Note within the proposed AD.

Based on the service information, we estimate that this proposed AD would affect about 6 products of U.S. registry. We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $1,020, or $170 per product.

In addition, we estimate that any necessary follow-on actions would take about 4 work-hours and require parts costing $800, for a cost of $1,140 per product. We have no way of determining the number of products that may need these actions.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-0222; Directorate Identifier 2010-NM-056-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov , including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2009-0254, dated December 1, 2009 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

We have reviewed the MCAI and related service information and, in general, agree with their substance. But we might have found it necessary to use different words from those in the MCAI to ensure the AD is clear for U.S. operators and is enforceable. In making these changes, we do not intend to differ substantively from the information provided in the MCAI and related service information.

We might also have proposed different actions in this AD from those in the MCAI in order to follow FAA policies. Any such differences are highlighted in a Note within the proposed AD.

Based on the service information, we estimate that this proposed AD would affect about 21 products of U.S. registry. We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $1,785, or $85 per product.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2011-0221; Directorate Identifier 2010-NM-120-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov , including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

We received reports that cracks in the center spar lower cap and, in some cases, the web of the spar, have been found at stations Xrs=168.00, Xrs=251.00, and Xrs=358.00. These cracks originate in the most inboard fastener hole of the access opening doublers. A total of 12 cracks have been found in airplanes having accumulated between 26,121 and 50,136 total flight cycles. The cracks appear to be consistent with fatigue cracks. Such cracking in the area around certain fasteners of the access opening doubler on the left and right wing center spar lower cap, if not detected and corrected, could compromise the structural integrity of the wing structure.

We have reviewed Boeing Alert Service Bulletin DC8-57A103, dated May 5, 2010. This service bulletin describes procedures for repetitive high frequency eddy current (HFEC) inspections or low frequency eddy current (LFEC) inspections for cracks on the area around certain fasteners of the left and right wing center spar lower cap at stations Xrs=168.00, Xrs=251.00, and Xrs=358.00, and repair if necessary.

This service bulletin also describes procedures for repetitive (post-repair) inspections for cracking of the repaired area, using the inspection defined in Method 101 of Section 57-10-06, or Method 101 or 104 of Section 57-10-16, of the McDonnell Douglas DC-8 Supplemental Inspection Document (SID), Report L26-011, Volume II, Revision 8, dated January 2005, as applicable.

For airplanes on which no cracking is found, the repetitive interval is either 1,750 flight cycles or 6,000 flight cycles, depending on the inspection type.

For airplanes on which cracking is found, the repetitive interval for non-repaired areas is either 1,750 flight cycles or 6,000 flight cycles, depending on the inspection type.

For airplanes on which cracking is found, the compliance time for the initial post-repair inspection is between 7,600 flight cycles and 43,000 flight cycles after doing the repair, depending on the configuration and inspection type. The repetitive interval is between 1,400 flight cycles and 5,300 flight cycles, depending on the configuration and inspection type.

This proposed AD will affect the inspections, corrective actions, and reports required by AD 2008-25-05, Amendment 39-15763 (73 FR 78936, December 24, 2008), for Principal Structural Elements (PSE) 57.08.013/-014 and 57.08.035/-036 of the DC-8 SID.

We are proposing this AD because we evaluated all relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.

This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between the Proposed AD and the Service Information.”

Boeing Alert Service Bulletin DC8-57A103, dated May 5, 2010, does not specify a corrective action if cracking is found during the inspections of the repaired area. If cracking is found during the inspections of the repaired area, this proposed AD would require repairing those conditions in one of the following ways:

• In accordance with a method that we approve; or

• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

We estimate that this proposed AD would affect 41 airplanes of U.S. registry. We also estimate that it would take 12 work-hours per product to comply with this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this proposed AD to the U.S. operators to be $41,820, or $1,020 per product.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866,

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979), and

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

You can find our regulatory evaluation and the estimated costs of compliance in the AD Docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

As a part of the President's Export Control Reform effort, the Department of State proposes to amend Parts 123 and 126 of the ITAR to reflect new policies regarding coverage of replacement parts/components and incorporated articles.

The Department's review of current ITAR treatment of replacement parts/components led to the proposed change to streamline the flow of parts and components and to eliminate redundancy in licensing. The current rule regarding parts and components imposes burdensome requirements for additional licenses for licensed end-users and end-uses for systems and components already vetted in earlier licenses. The proposed rule adds a new section (§ 123.28) that facilitates the expeditious repair of U.S. supplied end-items abroad, enabling more timely response to coalition forces, as well as other allies and friends, by eliminating the requirement for a license for parts and components for systems approved in a previous license. This proposed exemption applies only to exporters specifically identified in a previously approved authorization to export the end-item in question. It would not apply to upgrades of capabilities of the original end-item. The type, amount, and frequency of parts and components could not exceed the type, amount, and frequency consistent with normal logistical repair/replacement operations. Nor can the value of the purchase order exceed an amount that would require Congressional notification. The exporter must have in its possession a copy of the purchase order from the foreign government end-user and cite in its Automated Export System (AES) filing the license number for the original export. The exporter must use the U.S. Postal Service, freight forwarders registered with the Directorate of Defense Trade Controls (DDTC) and eligible, or licensed customs brokers that are subject to background investigation and have passed a comprehensive examination administered by U.S. Customs and Border Protection. Finally, this exemption does not apply to exporters who are otherwise ineligible.

The Department's review of current ITAR treatment of incorporated articles led to the proposed change with a view to limit ITAR coverage to where diversion of the embedded defense article is a realistic and practical concern. To this end, the proposed new § 126.19 sets out conditions under which a DDTC license is not required for the export or re-export of defense articles incorporated into an end-item that is “subject to the Export Administration Regulations (EAR).” Those conditions include where the end-item would be “rendered inoperable” by the removal of the defense article, where no technical data for development or production are transferred with the defense article, and where the incorporation of the defense article does not provide (or is not related to) a military application. Additionally, no license is required for the export or re-export of a defense article when that article would be rendered inoperable by removal from the end-item. A license would be required for the export of defense articles that are spare or replacement parts when they are embedded into a larger assembly such that they can be removed without destroying the defense articles. The proposed new § 126.19 would not go into effect until the Department of Commerce amends its regulations such that the ITAR and CCL provide complimentary coverage of the articles in question.

The proposed rules were presented to the Defense Trade Advisory Group (DTAG), a Department of State advisory committee, for purposes of comment and evaluation. The DTAG commented favorably on most aspects of the proposed rules, but also recommended certain changes. Having thoroughly reviewed and evaluated the comments and the recommended changes, the Department has determined that it will proceed with the proposed rules per the Department's evaluation of the written comments and recommendations, as noted in the following paragraphs:

The DTAG commented favorably on the addition of a new § 123.28 ( replacement parts/components ), with some recommended edits. We note that in the interim we changed the title of the section by removing the word “special” before exemption, removing the word “spare” before “parts/components” and replacing it with the word “replacement,” to make clear that this exemption applies to the replacement of components for systems already authorized for export. The DTAG recommended elimination of the limitation that the exporter must be the manufacturer of the end-item. We concurred with the change and eliminated that condition.

The DTAG also recommended expanding the wording that defines who is qualified to use the exemption from “original exporter of the end-item” to “applicant of a previously approved authorization.” We concurred with that change with minor edits.

The DTAG further suggested modifying the limitation regarding upgrades in capabilities to ensure that it does not preclude “replacement parts or components that would result in enhancements or improvements only in the reliability or maintainability * * *” We concurred with that change in the form of a note.

The DTAG suggested adding a requirement that the exporter use the U.S. Postal Service, registered freight forwarders, and licensed brokers. We concurred with that change.

The DTAG recommended expanding the exemption to apply to a “second exporter” if they met the conditions of (a) and (b). We did not accept that change as the unclear terminology could potentially open up the exemption for unlimited sources. We are willing to explore the possibility of expansion of the exemption to include major subcontractor component suppliers, but the proposed “second exporter” language is too broad.

The DTAG recommended adding a condition that the foreign government end-user is not subject to restrictions under § 126.1. We concurred with that change.

The DTAG commented favorably on the addition of a new § 126.19 ( incorporated articles ), with some recommended edits. The DTAG recommended changing the proposed rule to cover defense articles embedded into “a higher level assembly that is not an end item. * * *” We did not accept that recommendation. The recommendation would remove the assurance contained in the proposed rule that the ultimate end-item would be an article subject to the EAR. It is our intent to avoid creating a means by which integrated defense articles could find their way into higher level militarily relevant assemblies.

The DTAG proposed alternate models that added defense article exports “solely for integration into and inclusion as an integral part of a higher level assembly * * *” We did not accept that change because it effectively would allow for the export of non-embedded defense articles without a license and would pose too great a risk of diversion. The proposed rule requires that defense articles be pre-embedded or pre-incorporated, which provides a measure of security.

These proposed amendments involve a foreign affairs function of the United States and, therefore, are not subject to the procedures contained in 5 U.S.C. 553 and 554. The Department of State has nevertheless determined that the public interest would be served by publishing this proposed rule and soliciting public comment.

Since these proposed amendments are not subject to 5 U.S.C. 553, they do not require analysis under the Regulatory Flexibility Act.

These proposed amendments do not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

These proposed amendments have been found not to be a major rule within the meaning of the Small Business Regulatory Enforcement Fairness Act of 1996.

These proposed amendments will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, it is determined that these proposed amendments do not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to these amendments.

These proposed amendments are exempt from review under Executive Order 12866, but has been reviewed internally by the Department of State to ensure consistency with the purposes thereof.

The Department of State has reviewed the proposed amendments in light of sections 3(a) and 3(b)(2) of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

The Department of State has determined that this rule will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not pre-empt tribal law. Accordingly, the requirement of Section 5 of Executive Order 13175 does not apply to this rule.

This proposed rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. chapter 35.

Accordingly, for the reasons set forth above, Title 22, Chapter I, Subchapter M, parts 123 and 126 are proposed to be amended as follows:

On January 18, 2011, the President issued Executive Order 13563, “Improving Regulation and Regulatory Review,” to ensure that Federal regulations seek more affordable, less intrusive means to achieve policy goals, and that agencies give careful consideration to the benefits and costs of those regulations. The Executive Order can be found at: http://www.gpo.gov/fdsys/pkg/FR-2011-01-21/pdf/2011-1385.pdf.

To implement the Executive Order, the Department is taking two immediate steps to launch its retrospective review of existing regulatory and reporting requirements. First, the Department issues this Request for Information (RFI) seeking public comment on how best to review its existing regulations and to identify whether any of its existing regulations should be modified or repealed. Second, the Department has created a link on the DOS Internet site to an e-mail in-box at RegulatoryReview@State.gov, which interested parties can use to identify to DOS—on a continuing basis—regulations that may be in need of review in the future. These steps will help the Department ensure that its regulations remain necessary, properly tailored, and have up-to-date requirements that effectively achieve regulatory objectives without imposing unwarranted costs.

Pursuant to the Executive Order, the Department is developing a preliminary plan for the periodic review of its existing regulations and reporting obligations. The Department's goal is to create a systematic method for identifying those significant rules that are obsolete or simply no longer make sense. While this review will focus on the elimination of rules that are no longer warranted, DOS will also consider strengthening, complementing, or modernizing rules where necessary or appropriate—including, as relevant, undertaking new rulemakings.

Consistent with the Department's commitment to public participation in the rulemaking process, the Department is beginning this process by soliciting views from the public on how best to conduct its analysis of existing DOS rules and how best to identify those rules that might be modified or repealed. It is also seeking views from the public on specific rules or Department-imposed obligations that should be altered or eliminated. In short, engaging the public in an open, transparent process is a crucial first step in DOS's review of its existing regulations.

The following list of questions is intended solely to assist in the formulation of comments and is not intended to be exhaustive or restrict the issues that the public might want to address. The Department requests that anyone submitting comments specify the regulation or reporting requirement at issue, providing legal citation when known, and the reasons why the regulation or reporting requirement should be modified or repealed.

(1) How can the Department best promote meaningful periodic reviews of its existing rules and how can it best identify those rules that might be modified or repealed?

(2) What factors should the agency consider in selecting and prioritizing rules and reporting requirements for review?

(3) Are there regulations that simply make no sense or have become unnecessary, ineffective, or ill advised and, if so, what are they?

(4) Are there rules that are still necessary, but have not operated as well as expected such that a stronger or different approach is justified?

(5) Does the Department currently collect information that it does not need or use effectively to achieve regulatory objectives?

(6) Are there regulations, reporting requirements, or regulatory processes that are unnecessarily complicated or could be streamlined to achieve regulatory objectives in more efficient ways?

(7) Can new technologies be leveraged to modify or do away with existing regulatory or reporting requirements?

(8) How can the Department best obtain and consider accurate, objective information and data about the costs, burdens, and benefits of existing regulations? Are there existing sources of data the Department can use to evaluate the post-promulgation effects of regulations over time?

(9) Are there regulations that are working well that can be expanded or used as a model to fill gaps in other DOS regulatory programs?

(10) Are there other concerns that DOS should consider consistent with Executive Order 13563?

The Department notes that this RFI is issued solely for information and program-planning purposes. While responses to this RFI do not bind DOS to any further actions related to the response, all submissions will be made publicly available on http://www.regulations.gov.

This document contains proposed amendments to 26 CFR part 301 under section 6104(c), which will replace current § 301.6104(c)-1 in its entirety. Section 6104(c) governs when the IRS may disclose to state officials certain information about organizations described in section 501(c)(3) (“charitable organizations”), organizations that have applied for recognition as organizations described in section 501(c)(3) (“applicants”), and certain other exempt organizations. Section 6104(c) was added to the Code by section 101(e) of the Tax Reform Act of 1969 (Pub. L. 91-172, 83 Stat. 523) and significantly amended by section 1224(a) of the PPA (Pub. L. 109-280, 120 Stat. 1091).

Section 501(c)(3) organizations may be affected by the expanded disclosures to state officials authorized under the statute and proposed regulations. First, the IRS is now authorized (under new section 6104(c)(2), as added by the PPA) to disclose information about certain proposed revocations and proposed denials before an administrative appeal has been made and a final revocation or denial has been issued. For those organizations that have received a determination letter stating that they are described in section 501(c)(3), the IRS may disclose a proposed revocation (before any administrative appeal) to an appropriate state officer (ASO). This broader authority applies both where the organization was required under section 508 to apply for the determination letter and where the organization elected to apply for a determination letter even though it was not required to do so. The IRS continues to be authorized to disclose final revocations and final denials issued after any administrative appeal has been concluded for any section 501(c)(3) organization.

Second, under the authority of new section 6104(c)(2)(D), as added by the PPA, the IRS may disclose returns or return information of any section 501(c)(3) organization to ASOs on its own initiative, regardless of whether it has initiated an examination, if it determines that the information may be evidence of noncompliance with state laws under the jurisdiction of the ASO. Thus, if the IRS believes these conditions are met, it may, for example, disclose to ASOs a proposed revocation of exemption for a section 501(c)(3) organization that does not have a determination letter. All disclosures authorized under section 6104(c) may be made only if the state receiving the information is following applicable disclosure, recordkeeping and safeguard procedures.

The statute and proposed regulations also permit disclosure of information to state officials about all applicants for section 501(c)(3) status.

Exempt organizations other than section 501(c)(3) organizations also may be affected by the disclosures to state officials authorized under the statute and proposed regulations. The IRS is authorized to disclose returns and return information of these organizations to ASOs upon written request, but only to the extent necessary to administer state laws regulating the solicitation or administration of charitable funds or charitable assets. Again, all such disclosures may be made only if the state receiving the information is following applicable disclosure, recordkeeping and safeguard procedures.

Section 6104(c)(1), which is unchanged by the PPA, directs the IRS to share certain information with ASOs regarding charitable organizations and applicants. Specifically, section 6104(c)(1) provides that the IRS is to notify the ASO of the following final determinations: (1) A refusal to recognize an entity as an organization described in section 501(c)(3); (2) the operation of a section 501(c)(3) organization in a manner not meeting, or no longer meeting, the requirements of its exemption; and (3) the mailing of a notice of deficiency for any tax imposed under section 507, chapter 41, or chapter 42. See section 6104(c)(1)(A) and (c)(1)(B). The directive under section 6104(c)(1)(A) to notify ASOs of an organization no longer meeting the requirements for exemption under section 501(c)(3) includes not only notice of a revocation of exemption, but also notice (when the IRS is so informed) that a charitable organization is terminating or has dissolved in accordance with its governing documents. Upon request, an ASO may inspect and copy the returns, filed statements, records, reports, and other information relating to a final determination as described in this paragraph, as are relevant to any determination under state law. See section 6104(c)(1)(C).

The PPA amended section 6104(c) by striking paragraph (2) and inserting new paragraphs (2) through (6) as follows.

(1) The IRS may disclose to an ASO proposed refusals to recognize organizations as charitable organizations, and proposed revocations of such recognition. The PPA also allows disclosure of notices of proposed deficiencies of excise taxes imposed by section 507 and chapters 41 and 42 relating to charitable organizations. See section 6104(c)(2)(A)(i) and (c)(2)(A)(ii). Previously, only final determinations of this kind (denials of recognition, revocations, and notices of deficiency) could be disclosed under section 6104(c).

(2) The IRS may disclose to an ASO the names, addresses, and taxpayer identification numbers of applicants. See section 6104(c)(2)(A)(iii). Previously, information on applicants, other than information relating to a denial of recognition, could not be disclosed under section 6104(c).

(3) The IRS may disclose to an ASO the returns and return information of organizations with respect to which information is disclosed as described in paragraphs (1) and (2) of this section II (proposed determinations and applicant identifying information). See section 6104(c)(2)(B). Prior law allowed for disclosure under section 6104(c) only of returns and return information related to final determinations.

(4) Proposed determinations, identifying information, and the related returns and return information with respect to charitable organizations and applicants may be disclosed to an ASO only upon the ASO's written request and only as necessary to administer state laws regulating charitable organizations, such as laws governing tax-exempt status, charitable trusts, charitable solicitation, and fraud. See section 6104(c)(2)(C). Prior law provided for automatic disclosure (without a request), but only of final determinations and their related returns and return information.

(5) The IRS may disclose to an ASO on its own initiative (without a written request) returns and return information with respect to charitable organizations and applicants if the IRS determines that this information might constitute evidence of noncompliance with the laws under the jurisdiction of the ASO. See section 6104(c)(2)(D). There was no such provision under section 6104(c) previously.

(6) The IRS may disclose returns and return information of section 501(c) organizations other than those described in section 501(c)(1) or (c)(3) to an ASO upon the ASO's written request, but only to the extent necessary in administering state laws relating to the solicitation or administration of charitable funds or charitable assets of such organizations. See section 6104(c)(3). Previously, only information relating to charitable organizations or applicants was disclosed under section 6104(c).

(7) Returns and return information of organizations and taxable persons disclosed under section 6104(c) may be disclosed in civil administrative and civil judicial proceedings pertaining to the enforcement of state laws regulating such organizations, under procedures prescribed by the IRS similar to those under section 6103(h)(4). See section 6104(c)(4). There was no such provision under section 6104(c) previously.

(8) No return or return information may be disclosed under section 6104(c) to the extent the IRS determines that such disclosure would seriously impair federal tax administration. See section 6104(c)(5). This disclosure prohibition, though new in the PPA, was provided previously by regulation. See current § 301.6104(c)-1(b)(3)(ii).

(9) The IRS may disclose returns and return information under section 6104(c) to a state officer or employee designated by the ASO to receive such information on the ASO's behalf. See section 6104(c)(2)(C) (flush language) and (c)(3). Prior law did not provide for IRS disclosures to persons other than ASOs.

(10) An ASO is defined as the state attorney general, state tax officer, any state official charged with overseeing charitable organizations (in the case of charitable organizations and applicants), and the head of the state agency charged with the primary responsibility for overseeing the solicitation of funds for charitable purposes (in the case of section 501(c) organizations other than those described in section 501(c)(1) or (c)(3)). See section 6104(c)(6)(B). Before its amendment by the PPA, section 6104(c)(2) defined ASO as the state attorney general, state tax officer, or any state official charged with overseeing organizations of the type described in section 501(c)(3).

The PPA amended section 6103(p) to make the disclosure of returns and return information under section 6104(c) subject to the disclosure, recordkeeping, and safeguard provisions of section 6103. These provisions include—

(1) section 6103(a), which is the general prohibition on the disclosure of returns and return information, except as authorized by Title 26 of the United States Code;

(2) section 6103(p)(3), which requires the IRS to maintain permanent standardized records of all requests for inspection or disclosure of returns or return information under section 6104(c) and of all such information inspected or disclosed pursuant to those requests; and

(3) section 6103(p)(4), which requires an ASO, as a condition for receiving returns or return information under section 6104(c), to establish and maintain certain safeguards, such as keeping permanent standardized records of all requests and disclosures, maintaining a secure information storage area, restricting access to the information, and providing whatever other safeguards the IRS deems necessary to protect the confidentiality of the information. See § 301.6103(p)(4)-1 and IRS Publication 1075, Tax Information Security Guidelines for Federal, State and Local Agencies and Entities. Publication 1075 can be found at http://www.irs.gov/formspubs.

The PPA also included amendments to sections 7213, 7213A, and 7431 to impose civil and criminal penalties for the unauthorized disclosure or inspection of section 6104(c) information.

In general, before any federal or state agency may receive returns and return information from the IRS under a particular Code provision, it must file with the IRS a report detailing the physical, administrative, and technical safeguards implemented by the agency to protect this information from unauthorized inspection or disclosure. Only upon approval of these safeguards by the IRS, as well as satisfaction of any other statutory requirements (such as submission of a written request), may an agency receive the information to which it is entitled under the Code, and then only for the use specified by the relevant statute. See section 6103(p)(4).

Under various disclosure programs, the IRS and other federal and state agencies often execute agreements detailing the responsibilities of the parties and the terms and parameters of the disclosure arrangement. For example, under section 6103(d), the IRS executes a disclosure agreement (the “Basic Agreement”) with each state tax agency to which it discloses information. The Basic Agreement, which serves as the written request required by section 6103(d), has been the foundation of the state tax disclosure program under this provision of the Code for over 30 years. See Internal Revenue Manual Exhibit 11.3.32-1 (sample Basic Agreement).

After the PPA, the IRS revised its disclosure procedures under section 6104(c) to model them after the highly successful section 6103(d) program. The section 6104(c) program uses a disclosure agreement patterned after the Basic Agreement but tailored to the specific requirements and restrictions of section 6104(c).

These proposed regulations provide guidance regarding disclosures under section 6104(c), as amended by the PPA. The PPA amendments to sections 6104(c) and 6103 expand the scope of information the IRS may disclose to an ASO, but make such disclosures contingent on the ASO adopting the safeguard standards and procedures of section 6103 that apply to federal and state agencies that receive returns and return information under other provisions of the Code. Accordingly, these proposed regulations provide that, without prior safeguard approval, the IRS will not give automatic notification of any determinations or other information that may be disclosed under section 6104(c).

Under these proposed regulations, the IRS may (and currently does) require an ASO to enter into a disclosure agreement with the IRS, which will stipulate the procedures for disclosure under section 6104(c), as well as the restrictions on use and redisclosure. These proposed regulations provide that this agreement, or any similar document, satisfies the requirement under section 6104(c) for a written request for disclosure.

An ASO who meets the safeguard and other procedural requirements of section 6103(p)(4) may receive information from the IRS to be used in the administration of state laws governing charitable organizations, as well as laws governing the solicitation or administration of charitable funds or charitable assets of certain noncharitable exempt organizations. The information available to ASOs under these proposed regulations not only is greater in scope than what was available under section 6104(c) before its amendment by the PPA, but comes at an earlier stage in the IRS administrative and enforcement processes. Thus, the IRS may disclose such information as whether an organization has applied for recognition as a charitable organization and, if so, whether the IRS proposes to deny such recognition, or the organization has withdrawn its application; whether an organization's charitable status has terminated; whether the IRS proposes to assess any chapter 42 excise taxes (for example, the tax on excess benefit transactions under section 4958); and whether the IRS has revoked an organization's exemption, or proposes to revoke the recognition of its exemption.

Without a written request, but still subject to the safeguard requirements of section 6103(p)(4), the IRS has the authority under section 6104(c)(2)(D) to disclose returns and return information of charitable organizations and applicants if it determines that such information may constitute evidence of noncompliance with the laws under the ASO's jurisdiction. The IRS may make these disclosures on its own initiative. These proposed regulations clarify that the IRS' authority under section 6104(c)(2)(D) is in addition to its disclosure authority under other provisions of section 6104(c)(1) and (c)(2), to the effect that discretionary disclosures may be made before the IRS issues a proposed determination or takes other action. The proposed regulations also make clear that the determination required by the statute concerns possible noncompliance with state laws regulating charitable organizations and not just any state law violation.

The disclosure provisions of section 6104(c), as amended by the PPA, offer significant advantages to states in their enforcement efforts. The ability of the IRS to disclose returns and return information early in its own administrative and enforcement processes, as well as the IRS' authority under section 6104(c)(2)(D) to disclose information on its own initiative, greatly enhance the administration and enforcement of state laws, both tax and nontax, governing charitable activities, funds, and assets.

These proposed regulations define certain key terms for purposes of section 6104(c), including “appropriate state officer”, “return”, “return information”, and “taxable person.”

It has been determined that this notice of proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866; therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply to the proposed regulations; therefore, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, the proposed regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comments regarding their impact on small businesses.

Before these proposed regulations are adopted as final, any written (signed original and 8 copies) or electronic comments timely submitted to the IRS will be considered. The IRS and Treasury Department request comments on the clarity of these proposed regulations and how they might be made easier to understand. Of particular interest are comments on whether paragraph (e) of these proposed regulations, describing the organizations to which disclosure applies, lists all the organizations with respect to which ASOs might legitimately need information. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person who timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register .

The principal author of these regulations is Casey Lothamer of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), though other persons in the IRS and Treasury Department participated in their development.

Accordingly, 26 CFR part 301 is proposed to be amended as follows:

The Postal Service is proposing to adopt revised rules for 39 CFR Part 952. These revised rules of procedure have the same general coverage as the existing rules. However, the revised rules have been updated, are more comprehensive than the existing rules, and are intended to reflect more precisely current practice.

These revised rules will completely replace the existing rules of practice and once adopted as a final rule, will be effective immediately in accordance with section 952.2. While the language of the proposed rules may have changed considerably for clarity, and to reflect more precisely the practices in these matters, we here identify the most significant changes of substance.

Section 952.7 is renamed from “Notice of answer and hearing” to “Notice of docketing and answer.” Under the previous rules, a hearing was automatically scheduled for hearing thirty days from receipt of the complaint. Hearings are now scheduled as needed by the presiding officer after the pleadings have been received. The notice from the Recorder will include the notice that the matter has been docketed and advise Respondent that an answer is required within 30 days.

Section 952.8 is modified to simplify service of the complaint and now requires Complainant to complete service of the notice of docketing and answer due date along with a copy of the complaint. Previously, the Recorder was required to forward the complaint and the notice of docketing and hearing due date to the local postmaster, who in turn served Respondent. The local postmasters have been removed from the procedure. The Recorder will now forward a copy of the notice of docketing and answer due date (see revised section 952.7), a copy of these rules and a docketed copy of the complaint to Complainant. Complainant is then responsible for obtaining service through certified mail, return receipt requested. Service is now complete upon mailing. Complainant is required to file either a receipt acknowledging the delivery of the notice or an affidavit of service if the mail is returned. Service may also be accomplished by hand.

Section 952.9 is modified to require the parties, after the filing of the initial complaint, to serve all pleadings, motions, proposed orders and other documents for the record on the opposing party and provide an appropriate affidavit of service. The new rule clarifies that discovery does not need to be filed with the presiding officer unless the parties are seeking to include it in the record or the presiding officer so orders. In addition, the rule is changed to allow the filing of pleadings, motions, proposed orders and other documents by facsimile and electronic mail at the discretion of the presiding officer.

Section 952.11 is modified to authorize the presiding officer to rule that a party that fails to respond to or comply with any order is in default. Currently, only a Respondent can be found in default and only for either failing to file an answer or for failing to appear at a hearing. The new rule will allow the presiding officer to enter a default against a non-responding party even if the initial pleadings have been received.

Section 952.16 requires an attorney representing Respondent to file a notice of appearance. An attorney for either party who is seeking to withdraw from representation must file a motion to withdraw, which will be granted at the discretion of the presiding officer. If a successor attorney is not appointed at the same time for Respondent, the withdrawn attorney must provide adequate contact information for Respondent.

Section 952.17(b)(10) is added to allow the presiding officer to resolve the proceeding on the written record without a hearing either at the request of the parties or on the presiding officer's own initiative. The current rules do not specifically allow for proceeding on the written record without a hearing.

Section 952.17(b)(11) is added to allow for a hearing to be conducted by telephone, video conference, or other appropriate means.

Section 952.21 is modified to allow the parties to participate in voluntary discovery without the intervention of the presiding officer and to clarify the discovery rules.

Accordingly, the Postal Service invites public comment on the following proposed rules.

Throughout this document, “we,” “us,” or “our,” refer to EPA.

Today's proposed action concerns two submittals from California. The first submittal from the state is the California Regional Haze Plan (CRHP). The second submittal from the state is the 2007 Transport SIP, submitted as Appendix C to the State Strategy for California's 2007 State Implementation Plan for the 1997 ozone and PM 2.5 National Ambient Air Quality Standards. Details on both submittals follow below.

The California Air Resource Board (ARB) submitted the California Regional Haze Plan (CRHP) to EPA on March 16, 2009. 1 ARB submitted additional materials to EPA on September 8, 2009. 2 After discussion with EPA staff regarding BART-eligible sources, ARB submitted updated information about these sources on June 9, 2010. 3 ARB's March 16, 2009 submittal includes public process documentation for the CRHP and documentation of a duly noticed public hearing held on January 22, 2009.

On November 16, 2007, ARB submitted the State Strategy for California's 2007 State Implementation Plan to attain the 1997 8-hour ozone and PM 2.5 NAAQS (2007 State Strategy). 4 Appendix C of the 2007 State Strategy, as modified by Attachment A, 5 contains the “Interstate Transport State Implementation Plan (SIP) for 8-hour Ozone and PM 2.5 to satisfy the Requirements of Clean Air Act section 110(a)(2)(D)(i) for the State of California” (2007 Transport SIP). The 2007 Transport SIP addresses the Transport SIP requirements of CAA section 110(a)(2)(D)(i) for the 1997 8-hour ozone and 1997 PM 2.5 NAAQS. ARB's November 16, 2007 submittal includes public process documentation for the 2007 State Strategy, including the 2007 Transport SIP. In addition, the SIP revision includes documentation of a duly noticed public hearing held on September 27, 2007 on the proposed 2007 State Strategy.

For the portion of today's proposed action related to the 2007 Transport SIP, we are proposing action only with regard to the section 110(a)(2)(D)(i)(II) requirement that the SIP must prohibit any source or other type of emissions activity in California from emitting pollutants that will interfere with another state's measures to protect visibility. EPA intends to act in separate proposals on other portions of California's 2007 Transport SIP that address the remaining elements of CAA section 110(a)(2)(D)(i) for the 1997 8-hour ozone and PM 2.5 NAAQS. 6

Regional haze is visibility impairment produced by a multitude of sources and activities located across a broad geographic area that emit fine particles (PM 2.5 ) ( e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust), and their precursors ( e.g., sulfur dioxide (SO 2 ), oxides of nitrogen (NO X ) and in some cases, ammonia (NH 3 ) and volatile organic compounds (VOC)). Fine particle precursors react in the atmosphere to form fine particulate matter which impairs visibility by scattering and absorbing light. Visibility impairment reduces the clarity, color, and visible distance that one can see. PM 2.5 can also cause serious health effects and mortality in humans and contributes to environmental impacts, such as acid deposition and eutrophication.

Data from the existing visibility monitoring network, the “Interagency Monitoring of Protected Visual Environments” (IMPROVE) monitoring network, show that visibility impairment caused by air pollution occurs virtually all the time at most national park and wilderness areas. The average visual range in many Class I areas ( i.e., national parks and memorial parks, wilderness areas, and international parks meeting certain size criteria) in the western United States is 100-150 kilometers, or about one-half to two-thirds of the visual range that would exist without anthropogenic air pollution. 7 In most of the eastern Class I areas of the United States, the average visual range is less than 30 kilometers, or about one-fifth of the visual range that would exist under estimated natural conditions. 64 FR 35715 (July 1, 1999).

In section 169A(a)(1) of the 1977 Amendments to the CAA, Congress created a program to protect visibility in the nation's national parks and wilderness areas. 8 This section of the CAA establishes as a national goal the “prevention of any future, and the remedying of any existing, impairment of visibility in mandatory Class I Federal areas which impairment results from manmade air pollution.” On December 2, 1980, EPA promulgated regulations to address visibility impairment in Class I areas that is “reasonably attributable” to a single source or small group of sources, i.e., “reasonably attributable visibility impairment” (RAVI). 45 FR 80084. These regulations represented the first phase in addressing visibility impairment. EPA deferred action on regional haze that emanates from a variety of sources until monitoring, modeling, and scientific knowledge about the relationships between pollutants and visibility impairment were improved.

Congress added section 169B to the CAA in 1990 to address regional haze issues. EPA promulgated a rule to address regional haze on July 1, 1999, the Regional Haze Rule (RHR) (64 FR 35713). The RHR revised the existing visibility regulations to integrate provisions addressing regional haze impairment and to establish a comprehensive visibility protection program for Class I areas. The requirements for regional haze, found at 40 CFR 51.308 and 51.309, are included in EPA's visibility protection regulations at 40 CFR 51.300-309. Some of the main elements of the regional haze requirements are summarized in section III of this preamble. The requirement to submit a regional haze plan revision to the SIP applies to all 50 states, the District of Columbia and the Virgin Islands. 9 40 CFR 51.308(b) requires states to submit the first implementation plan addressing regional haze visibility impairment no later than December 17, 2007.

Successful implementation of the regional haze program will require long-term regional coordination among states, tribal governments and various federal agencies. As noted above, pollution affecting the air quality in Class I areas can be transported over long distances, even hundreds of kilometers. Therefore, to address effectively the problem of visibility impairment in Class I areas, states need to develop coordinated strategies with one another, taking into account the effect of emissions from one jurisdiction on the air quality in another.

Because the pollutants that lead to regional haze can originate from sources located across broad geographic areas, EPA has encouraged the states and tribes across the United States to address visibility impairment from a regional perspective. Five regional planning organizations (RPOs) were developed to address regional haze and related issues. The RPOs first evaluated technical information to better understand how their states and tribes impact Class I areas across the country, and then pursued the development of regional strategies to reduce emissions of particulate matter (PM) and other pollutants leading to regional haze.

The Western Regional Air Partnership (WRAP), one of five RPOs nationally, is a voluntary partnership of State, Tribal, Federal, and local air agencies dealing with air quality in the west. WRAP member states include: Alaska, Arizona, California, Colorado, Idaho, Montana, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming. WRAP Tribal members include Campo Band of Kumeyaay Indians, Confederated Salish and Kootenai Tribes, Cortina Indian Rancheria, Hopi Tribe, Hualapai Nation of the Grand Canyon, Native Village of Shungnak, Nez Perce Tribe, Northern Cheyenne Tribe, Pueblo of Acoma, Pueblo of San Felipe, and Shoshone-Bannock Tribes of Fort Hall.

On July 18, 1997, EPA promulgated new NAAQS for 8-hour ozone and for PM 2.5 . See 62 FR 38856; 62 FR 38652. Section 110(a)(1)requires states to submit a plan to address certain requirements for a new or revised NAAQS within three years after promulgation of such standards, or within such shorter time as EPA may prescribe. Section 110(a)(2) lists the elements that such new plan submissions must address, as applicable, including section 110(a)(2)(D)(i), which pertains to the interstate transport of certain emissions.

On April 25, 2005, EPA issued a “Finding of Failure to Submit SIPs for Interstate Transport for the 8-hour Ozone and PM 2.5 NAAQS.” 70 FR 21147. This included a finding that California and other states had failed to submit SIPs to address interstate transport of emissions affecting visibility and started a two-year clock for the promulgation of a Federal Implementation Plan (FIP) by EPA, unless the state made a submission to meet the requirements of section 110(a)(2)(D)(i) and EPA approves such submission. Id.

On August 15, 2006, EPA issued guidance on this topic entitled, “Guidance for State Implementation Plan (SIP) Submissions to Meet Current Outstanding Obligations Under Section 110(a)(2)(D)(i) for the 8-Hour Ozone and PM 2.5 National Ambient Air Quality Standards” (“2006 Guidance”).

As identified in the 2006 Guidance, the “good neighbor” provisions in section 110(a)(2)(D)(i) of the CAA require each state to have a SIP that prohibits emissions that adversely affect other states in ways contemplated in the statute. Section 110(a)(2)(D)(i) contains four distinct requirements related to the impacts of interstate transport. The SIP must prevent sources in the state from emitting pollutants in amounts which will: (1) Contribute significantly to nonattainment of the NAAQS in other states; (2) interfere with maintenance of the NAAQS in other states; (3) interfere with provisions to prevent significant deterioration of air quality in other states; or, (4) interfere with efforts to protect visibility in other states.

With respect to establishing that emissions from sources in the state would not interfere with measures in other states to protect visibility, the 2006 Guidance recommended that states make a submission indicating that it was premature, at that time, to determine whether there would be any interference with measures in the applicable SIP for another state designed to “protect visibility” until the submission and approval of regional haze SIPs. Regional haze SIPs were required to be submitted by December 17, 2007. See 74 FR 2392. At this later point in time, however, EPA believes it is now necessary to evaluate such section 110(a)(2)(D)(i) submissions from a state to ensure that the existing SIP, or the SIP as modified by the submission, contains adequate provisions to prevent interference with the visibility programs of other states, such as for consistency with the assumptions for controls relied upon by other states in establishing reasonable progress goals to address regional haze.

The regional haze program, as reflected in the RHR, recognizes the importance of addressing the long-range transport of pollutants for visibility and encourages states to work together to develop plans to address haze. The regulations explicitly require each state to address its “share” of the emission reductions needed to meet the reasonable progress goals for neighboring Class I areas. Working together through a regional planning process, states are required to address an agreed upon share of their contribution to visibility impairment in the Class I areas of their neighbors. 40 CFR 51.308(d)(3)(ii). Given these requirements, we anticipate that regional haze SIPs will contain measures that will achieve these emissions reductions, and that these measures will meet the requirements of section 110(a)(2)(D)(i).

As a result of the regional planning efforts in the west, all states in the WRAP region contributed information to a Technical Support System (TSS) which provides an analysis of the causes of haze, and the levels of contribution from all sources within each state to the visibility degradation of each Class I area. The WRAP states consulted in the development of reasonable progress goals, using the products of this technical consultation process to co-develop their reasonable progress goals for the western Class I areas. The modeling done by the WRAP relied on assumptions regarding emissions over the relevant planning period and embedded in these assumptions were anticipated emissions reductions in each of the states in the WRAP, including reductions from installation of Best Available Retrofit Technology (BART) at appropriate sources and other measures to be adopted as part of the state's long-term strategy for addressing regional haze. The reasonable progress goals in the draft and final regional haze SIPs that have now been prepared by states in the west accordingly are based, in part, on the emissions reductions from nearby states that were agreed on through the WRAP process.

California's 2007 Transport SIP refers to EPA's 2006 Guidance and states that the Regional Haze SIP would address interstate regional haze impacts. We interpret this to mean that California intended its Regional Haze Plan to address the interstate visibility requirement of section 110(a)(2)(D)(i) for the 1997 8-hour ozone and 1997 PM 2.5 NAAQS. Accordingly, our evaluation of the 2007 Transport SIP and whether it meets these CAA section 110(a)(2)(D)(i) visibility requirements relies on our evaluation of relevant information from California's Regional Haze Plan.

Regional haze SIPs must assure reasonable progress towards the national goal of achieving natural visibility conditions in Class I areas. Section 169A of the CAA and EPA's implementing regulations require states to establish long-term strategies for making reasonable progress toward meeting this goal. Implementation plans must also give specific attention to certain stationary sources that were in existence on August 7, 1977, but were not in operation before August 7, 1962, and require these sources, where appropriate, to install BART controls for the purpose of eliminating or reducing visibility impairment. The specific regional haze SIP requirements are discussed in further detail below.

The RHR establishes the deciview as the principal metric for measuring visibility. This visibility metric expresses uniform changes in haziness in terms of common increments across the entire range of visibility conditions, from pristine to extremely hazy conditions. Visibility expressed in deciviews is determined by using air quality measurements to estimate light extinction and then transforming the value of light extinction using a logarithm function. The deciview is a more useful measure for tracking progress in improving visibility than light extinction itself because each deciview change is an equal incremental change in visibility perceived by the human eye. Most people can detect a change in visibility at one deciview. 10

The deciview is used to express reasonable progress goals (RPGs) (which are interim visibility goals towards meeting the national visibility goal), defining baseline, current and natural conditions, and tracking changes in visibility. The regional haze SIPs must contain measures that ensure “reasonable progress” toward the national goal of preventing and remedying visibility impairment in Class I areas caused by anthropogenic air pollution by reducing anthropogenic emissions that cause regional haze. The national goal is a return to natural conditions, i.e., anthropogenic sources of air pollution would no longer impair visibility in Class I areas.

To track changes in visibility over time at each of the 156 Class I areas covered by the visibility program (40 CFR 81.401-437), and, as part of the process for determining reasonable progress, states must calculate the degree of existing visibility impairment at each Class I area at the time of each regional haze SIP submittal and periodically review progress every five years midway through each ten-year implementation period. To do this, the RHR requires states to determine the degree of impairment (in deciviews) for the average of the 20 percent least impaired (“best”) and 20 percent most impaired (“worst”) visibility days over a specified time period at each of their Class I areas. In addition, states must also develop an estimate of natural visibility conditions for the purpose of comparing progress toward the national goal. Natural visibility is determined by estimating the natural concentrations of pollutants that cause visibility impairment and then calculating total light extinction based on those estimates. EPA has provided guidance to states regarding how to calculate baseline, natural and current visibility conditions in documents titled, EPA's Guidance for Estimating Natural Visibility Conditions Under the Regional Haze Rule, September 2003, (EPA-454/B-03-005 located at http://www.epa.gov/ttncaaa1/t1/memoranda/rh_envcurhr_gd.pdf ), (hereinafter referred to as “EPA's 2003 Natural Visibility Guidance”), and Guidance for Tracking Progress Under the Regional Haze Rule (EPA-454/B-03-004 September 2003 located at http://www.epa.gov/ttncaaa1/t1/memoranda/rh_tpurhr_gd.pdf )), (hereinafter referred to as “EPA's 2003 Tracking Progress Guidance”).

For the first regional haze SIPs that were due by December 17, 2007, “baseline visibility conditions” were the starting points for assessing “current” visibility impairment. Baseline visibility conditions represent the degree of visibility impairment for the 20 percent least impaired days and 20 percent most impaired days for each calendar year from 2000 to 2004. Using monitoring data for 2000 through 2004, states are required to calculate the average degree of visibility impairment for each Class I area, based on the average of annual values over the five-year period. The comparison of initial baseline visibility conditions to natural visibility conditions indicates the amount of improvement necessary to attain natural visibility, while the future comparison of baseline conditions to the then current conditions will indicate the amount of progress made. In general, the 2000-2004 baseline period is considered the time from which improvement in visibility is measured.

The vehicle for ensuring continuing progress towards achieving the natural visibility goal is the submission of a series of regional haze SIPs from the states that establish two RPGs ( i.e., two distinct goals, one for the “best” and one for the “worst” days) for every Class I area for each (approximately) ten-year implementation period. The RHR does not mandate specific milestones or rates of progress, but instead calls for states to establish goals that provide for “reasonable progress” toward achieving natural ( i.e., “background”) visibility conditions. In setting reasonable progress goals (RPGs), states must provide for an improvement in visibility for the most impaired days over the (approximately) ten-year period of the SIP, and ensure no degradation in visibility for the least impaired days over the same period.

States have significant discretion in establishing RPGs, but are required to consider the following factors established in section 169A of the CAA and in EPA's RHR at 40 CFR 51.308(d)(1)(i)(A): (1) The costs of compliance; (2) the time necessary for compliance; (3) the energy and non-air quality environmental impacts of compliance; and, (4) the remaining useful life of any potentially affected sources. States must demonstrate in their SIPs how these factors are considered when selecting the RPGs for the best and worst days for each applicable Class I area. States have considerable flexibility in how they take these factors into consideration, as noted in EPA's Guidance for Setting Reasonable Progress Goals under the Regional Haze Program, July 1, 2007, memorandum from William L. Wehrum, Acting Assistant Administrator for Air and Radiation, to EPA Regional Administrators, EPA Regions 1-10 (pp. 4-2, 5-1) (“EPA's Reasonable Progress Guidance”). In setting the RPGs, states must also consider the rate of progress needed to reach natural visibility conditions by 2064 (referred to as the “uniform rate of progress” (URP) or the “glide path”) and the emission reduction measures needed to achieve that rate of progress over the ten-year period of the SIP. Uniform progress towards achievement of natural conditions by the year 2064 represents a rate of progress that states are to use for analytical comparison to the amount of progress they expect to achieve. In setting RPGs, each state with one or more Class I areas (“Class I state”) must also consult with potentially “contributing states,” i.e., other nearby states with emission sources that may be affecting visibility impairment at the Class I state's areas. 40 CFR 51.308(d)(1)(iv).

Section 169A of the CAA directs states to evaluate the use of retrofit controls at certain larger, often uncontrolled, older stationary sources in order to address visibility impacts from these sources. Specifically, section 169A(b)(2)(A) of the CAA requires states to revise their SIPs to contain such measures as may be necessary to make reasonable progress towards the natural visibility goal, including a requirement that certain categories of existing major stationary sources  11 built between 1962 and 1977 procure, install, and operate the “Best Available Retrofit Technology (BART)” as determined by the state. Under the RHR, states are directed to conduct BART determinations for such “BART-eligible” sources that may be anticipated to cause or contribute to any visibility impairment in a Class I area. Rather than requiring source-specific BART controls, states also have the flexibility to adopt an emissions trading program or other alternative program as long as the alternative provides greater reasonable progress towards improving visibility than BART.

On July 6, 2005, EPA published the Guidelines for BART Determinations Under the Regional Haze Rule at Appendix Y to 40 CFR Part 51 (hereinafter referred to as the “BART Guidelines”) to assist states in determining which of their sources should be subject to the BART requirements and in determining appropriate emission limits for each applicable source. In making a BART determination for a fossil fuel-fired electric generating plant with a total generating capacity in excess of 750 megawatts, a state must use the approach set forth in the BART Guidelines. A state is encouraged, but not required, to follow the BART Guidelines in making BART determinations for other types of sources.

States must address all visibility-impairing pollutants emitted by a source in the BART determination process. The most significant visibility impairing pollutants are SO 2 , NO X and PM. EPA has indicated that states should use their best judgment in determining whether VOC or NH 3 compounds impair visibility in Class I areas.

Under the BART Guidelines, states may select an exemption threshold value for their BART modeling, below which a BART-eligible source would not be expected to cause or contribute to visibility impairment in any Class I area. The state must document this exemption threshold value in the SIP and must state the basis for its selection of that value. Any source with emissions that model above the threshold value would be subject to a BART determination review. The BART Guidelines acknowledge varying circumstances affecting different Class I areas. States should consider the number of emission sources affecting the Class I areas at issue and the magnitude of the individual sources' impacts. An exemption threshold set by the state should not be higher than 0.5 deciview.

In their SIPs, states must identify potential BART sources, described in the RHR as “BART-eligible sources”, and document their BART control determination analyses. In making BART determinations, section 169A(g)(2) of the CAA requires that states consider the following factors: (1) The costs of compliance; (2) the energy and non-air quality environmental impacts of compliance; (3) any existing pollution control technology in use at the source; (4) the remaining useful life of the source; and, (5) the degree of improvement in visibility which may reasonably be anticipated to result from the use of such technology. States are free to determine the weight and significance assigned to each factor.

A regional haze SIP must include source-specific BART emission limits and compliance schedules for each source subject to BART. Once a state has made its BART determination, the BART controls must be installed and in operation as expeditiously as practicable, but no later than five years after the date EPA approves the regional haze SIP. CAA section 169(g)(4). 40 CFR 51.308(e)(1)(iv). In addition to what is required by the RHR, general SIP requirements mandate that the SIP must also include all regulatory requirements related to monitoring, recordkeeping, and reporting for the BART controls on the source. States have the flexibility to choose the type of control measures they will use to meet the requirements of BART.

Consistent with the requirement in section 169A(b) of the CAA that states include in their regional haze SIP a ten- to fifteen-year strategy for making reasonable progress, section 51.308(d)(3) of the RHR requires that states include a long-term strategy (LTS) in their regional haze SIPs. The LTS is the compilation of all control measures a state will use during the implementation period of the specific SIP submittal to meet applicable RPGs. The LTS must include “enforceable emissions limitations, compliance schedules, and other measures needed to achieve the reasonable progress goals” for all Class I areas within and affected by emissions from the state. 40 CFR 51.308(d)(3).

When a state's emissions are reasonably anticipated to cause or contribute to visibility impairment in a Class I area located in another state, the RHR requires the impacted state to coordinate with contributing states to develop coordinated emissions management strategies. 40 CFR 51.308(d)(3)(i). In such cases, the contributing state must demonstrate that it has included in its SIP, all measures necessary to obtain its share of the emission reductions needed to meet the RPGs for the Class I area. The RPOs have provided forums for significant interstate consultation, but additional consultation between states may be required to sufficiently address interstate visibility issues ( e.g., where two states belong to different RPOs).

States should consider all types of anthropogenic sources of visibility impairment in developing their LTS, including stationary, minor, mobile, and area sources. At a minimum, states must describe how each of the following seven factors listed below are taken into account in developing their LTS: (1) Emission reductions due to ongoing air pollution control programs, including measures to address RAVI; (2) measures to mitigate the impacts of construction activities; (3) emissions limitations and schedules for compliance to achieve the RPG; (4) source retirement and replacement schedules; (5) smoke management techniques for agricultural and forestry management purposes including plans as currently exist within the state for these purposes; (6) enforceability of emissions limitations and control measures; and, (7) the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the period addressed by the LTS. 40 CFR 51.308(d)(3)(v).

As part of the RHR, EPA revised 40 CFR 51.306(c) regarding the LTS for RAVI to require that the RAVI plan must provide for a periodic review and SIP revision not less frequently than every three years until the date of submission of the state's first plan addressing regional haze visibility impairment, which was due December 17, 2007, in accordance with 40 CFR 51.308(b) and (c). On or before this date, the state must revise its plan to provide for review and revision of a coordinated LTS for addressing RAVI and regional haze, and the state must submit the first such coordinated LTS with its first regional haze SIP. Future coordinated LTSs, and periodic progress reports evaluating progress towards RPGs, must be submitted consistent with the schedule for SIP submission and periodic progress reports set forth in 40 CFR 51.308(f) and 51.308(g), respectively. The periodic review of a state's LTS must report on both regional haze and RAVI impairment and must be submitted to EPA as a SIP revision.

Section 51.308(d)(4) of the RHR requires a monitoring strategy for measuring, characterizing, and reporting on regional haze visibility impairment that is representative of all mandatory Class I areas within the state. The strategy must be coordinated with the monitoring strategy required in 40 CFR 51.305 for RAVI. Compliance with this requirement may be met through “participation” in the Interagency Monitoring of Protected Visual Environments (IMPROVE) network, i.e., review and use of monitoring data from the network. The monitoring strategy is due with the first regional haze SIP, and it must be reviewed every five years. The monitoring strategy must also provide for additional monitoring sites if the IMPROVE network is not sufficient to determine whether RPGs will be met.

The SIP must also provide for the following:

• Procedures for using monitoring data and other information in a state with mandatory Class I areas to determine the contribution of emissions from within the state to regional haze visibility impairment at Class I areas both within and outside the state;

• Procedures for using monitoring data and other information in a state with no mandatory Class I areas to determine the contribution of emissions from within the state to regional haze visibility impairment at Class I areas in other states;

• Reporting of all visibility monitoring data to the Administrator at least annually for each Class I area in the state, and where possible, in electronic format;

• Developing a statewide inventory of emissions of pollutants that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area. The inventory must include emissions for a baseline year, emissions for the most recent year for which data are available, and estimates of future projected emissions.

A state must also make a commitment to update the inventory periodically; and,

• Other elements, including reporting, recordkeeping, and other measures necessary to assess and report on visibility.

The RHR requires control strategies to cover an initial implementation period extending to the year 2018, with a comprehensive reassessment and revision of those strategies, as appropriate, every ten years thereafter. Periodic SIP revisions must meet the core requirements of section 51.308(d) with the exception of BART. The requirement to evaluate sources for BART applies only to the first regional haze SIP. Facilities subject to BART must continue to comply with the BART provisions of section 51.308(e), as noted above. Periodic SIP revisions will assure that the statutory requirement of reasonable progress will continue to be met.

The RHR requires that states consult with Federal Land Managers (FLMs) before adopting and submitting their SIPs. 40 CFR 51.308(i). States must provide FLMs an opportunity for consultation, in person and at least sixty days prior to holding any public hearing on the SIP. This consultation must include the opportunity for the FLMs to discuss their assessment of impairment of visibility in any Class I area and to offer recommendations on the development of the RPGs and on the development and implementation of strategies to address visibility impairment. Furthermore, a state must include in its SIP a description of how it addressed any comments provided by the FLMs. Finally, a SIP must provide procedures for continuing consultation between the state and FLMs regarding the state's visibility protection program, including development and review of SIP revisions, five-year progress reports, and the implementation of other programs having the potential to contribute to impairment of visibility in Class I areas.

As described in Section I, the California Regional Haze SIP consists of the CRHP and two supplemental submittals. ARB submitted the CRHP to EPA on March 16, 2009. ARB submitted additional materials to EPA on September 8, 2009. ARB submitted updated information about BART-eligible sources on June 9, 2010.

There are twenty-nine affected Class I areas in California. 12 These Class I areas include the following national parks, national monuments, and wilderness areas managed by the U.S. National Park Service, the U.S. Forest Service, and the U.S. Bureau of Land Management (USBLM):

1. Redwood National Park;

2. Marble Mountain Wilderness;

3. Lava Beds National Monument;

4. South Warner Wilderness;

5. Thousand Lakes Wilderness;

6. Lassen Volcanic National Park;

7. Caribou Wilderness;

8. Yolla Bolly Middle Eel Wilderness (includes land managed by USBLM);

9. Point Reyes National Seashore;

10. Ventana Wilderness;

11. Pinnacles National Monument;

12. Desolation Wilderness;

13. Mokelumne Wilderness;

14. Emigrant Wilderness;

15. Hoover Wilderness;

16. Yosemite National Park;

17. Ansel Adams Wilderness;

18. Kaiser Wilderness;

19. John Muir Wilderness;

20. Kings Canyon National Park;

21. Sequoia National Park;

22. Dome Lands Wilderness (includes land managed by the USBLM);

23. San Rafael Wilderness;

24. San Gabriel Wilderness;

25. Cucamonga Wilderness;

26. San Gorgonio Wilderness;

27. San Jacinto Wilderness;

28. Agua Tibia Wilderness; and,

29. Joshua Tree National Park.

As part of its analysis, ARB apportioned the state's twenty-nine Class I areas into the following four sub-regions: Northern California; Sierra California; Coastal California; and, Southern California. Within each sub-region, the Class I areas are assigned to a specific representative IMPROVE monitor. For example, within the Northern California sub-region, Class I areas are assigned as follows: The Marble Mountain Wilderness and the Yolla-Bolly-Middle Eel Wilderness are assigned to the Trinity IMPROVE monitor; the Lava Beds National Monument and South Warner Wilderness are assigned to the Lava Beds IMPROVE monitor; and, the Lassen Volcanic National Park, the Caribou wilderness, and the Thousand Lakes wilderness are assigned to the Lassen Volcanic IMPROVE monitor. 13

California's four sub-regions for analyzing regional haze represent groupings that consider the unique terrain, ecology, land use, and weather patterns around each IMPROVE monitor. ARB's detailed examination of the resultant ambient air monitoring data showed similarities within definable intra-State regions. These four sub-regions are different from each other based on physiographic features and land use patterns. California has grouped its Class I Areas by geographic sub-region to facilitate comparison of different landscapes, meteorological conditions, the impacts of local and regional emissions, and the results of local and regional control measures.

California identified Class I areas outside of the state that are affected by California's regional haze pollutants. (CRHP, Figure 8.1) The CRHP also examined specific visibility effects of emissions on the following Class I areas outside of the state: Jarbidge Wilderness Area, Nevada; Kalmiopsis Wilderness Area and Crater Lake National Park, Oregon; and, Sycamore Canyon Wilderness Area and Grand Canyon National Park, Arizona.

To conclude, we believe that California has identified all of Class I areas in the state that may be affected by emissions from California. Also, California identified Class I areas in neighboring states that may be affected by emissions from California. (CRHP, Figure 8.1)

ARB developed the visibility estimates in the CRHP using models and analytical tools provided by the WRAP. We have reviewed the models and analytical tools used by the WRAP and those used by ARB in developing the CHRP. In summary, we found that the models were used appropriately, consistent with EPA guidance in effect at the time of their use. The models used by the WRAP were state-of-the-science at the time the modeling was conducted and model performance was adequate for the purposes that they were used. 14

Baseline visibility conditions represent the degree of visibility impairment for the 20 percent least impaired days and 20 percent most impaired days for each calendar year from 2000 to 2004. Using monitoring data for 2000 through 2004, states are required to calculate the average degree of visibility impairment for each Class I area, based on the average of annual values over the five-year period. Appendix B of the CRHP provides the details of these 2000-2004 baseline deciview calculations for each Class I area.

For each Class I area, ARB calculated, in deciviews, the current visibility conditions (worst 20 percent of days) for the 2000-2004 baseline period (Table 1, column A) and the future natural conditions for 2064 (Table 1, column D), the long-term programmatic goal. ARB calculated the deciview value representing the best visibility days during 2000-2004 baseline conditions, a value that must be maintained in future years. 15

Table of Contents I. What action is EPA proposing in today's notice? II. What is the background for the action proposed by EPA in today's notice regarding NSR permitting requirements for the PM 2.5 NAAQS? III. What is the background for the action proposed by EPA in today's notice regarding the Phase II Rule for NO X as an ozone precursor? IV. What is EPA's analysis of South Carolina's SIP revision? V. Proposed Action VI. Statutory and Executive Order Reviews I. What action is EPA proposing in today's notice?

On December 2, 2010, SC DHEC submitted a proposed revision to EPA for approval into the South Carolina SIP to adopt Federal requirements for NSR permitting. The December 2, 2010, submittal addresses PSD and NNSR requirements related to the implementation of the 2006 PM 2.5 NAAQS as well as adding a provision of the PSD NO X as a precursor requirement established in the Phase II Rule. Pursuant to section 110 of the CAA, EPA is proposing to approve these changes into the South Carolina SIP.

South Carolina's December 2, 2010, SIP revision was submitted as a draft SIP revision and is not yet state-effective. Therefore, South Carolina requested that EPA “parallel process” the SIP revision. 1 Under this procedure, the EPA Regional Office works closely with the state while developing new or revised regulations. Generally, the state submits a copy of the proposed regulation or other revisions to EPA before conducting its public hearing. EPA reviews this proposed state action and prepares a notice of proposed rulemaking. EPA publishes this notice of proposed rulemaking in the Federal Register and solicits public comment in approximately the same time frame during which the state is holding its public hearing. The state and EPA thus provide for public comment periods on both the State and the Federal actions in parallel.

After South Carolina submits the formal state-effective SIP revision request (including a response to all public comments raised during the state's public participation process), EPA will prepare a final rulemaking notice for the SIP revision. If changes are made to the SIP revision after EPA's notice of proposed rulemaking, such changes must be acknowledged in EPA's final rulemaking action. If the changes are significant, then EPA may be obligated to re-propose the action. In addition, if the changes render the SIP revision not approvable, EPA's re-proposal of the action would be a disapproval of the revision.

Today's proposed action to revise the South Carolina SIP relates to EPA's “Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers (PM 2.5 ),” Final Rule, 73 FR 28321 (May 16, 2008) (the “NSR PM 2.5 Rule”). In the NSR PM 2.5 Rule, EPA finalized regulations to implement the NSR program for the PM 2.5 NAAQS. As a result of EPA's final NSR PM 2.5 Rule, states are required to provide SIP submissions no later than May 16, 2011, to address these requirements for both the PSD and NNSR programs. South Carolina's December 2, 2010, proposed SIP revision addresses the PSD and NNSR requirements for the PM 2.5 NAAQS. More detail on the NSR PM 2.5 Rule can be found in EPA's May 16, 2008, final rule and is summarized below.

Fine particles in the atmosphere are made up of a complex mixture of components. Common constituents include sulfate (SO 4 ); nitrate (NO 3 ); ammonium; elemental carbon; a great variety of organic compounds; and inorganic material (including metals, dust, sea salt, and other trace elements) generally referred to as “crustal” material, although it may contain material from other sources. Airborne particulate matter (PM) with a nominal aerodynamic diameter of 2.5 micrometers or less (a micrometer is one-millionth of a meter, and 2.5 micrometers is less than one-seventh the average width of a human hair) are considered to be “fine particles” and are also known as PM 2.5 . “Primary” particles are emitted directly into the air as a solid or liquid particle (e.g., elemental carbon from diesel engines or fire activities, or condensable organic particles from gasoline engines). “Secondary” particles (e.g., sulfate and nitrate) form in the atmosphere as a result of various chemical reactions.

The health effects associated with exposure to PM 2.5 include potential aggravation of respiratory and cardiovascular disease (i.e., lung disease, decreased lung function asthma attacks and certain cardiovascular issues). Epidemiological studies have indicated a correlation between elevated PM 2.5 levels and premature mortality. Groups considered especially sensitive to PM 2.5 exposure include older adults, children, and individuals with heart and lung diseases. For more details regarding health effects and PM 2.5 see EPA's Web site at http://www.epa.gov/oar/particlepollution/ (see heading “Health and Welfare”).

On July 18, 1997, EPA revised the NAAQS for PM to add new standards for fine particles, using PM 2.5 as the indicator. Previously, EPA used PM 10 (inhalable particles smaller than or equal to 10 micrometers in diameter) as the indicator for the PM NAAQS. EPA established health-based (primary) annual and 24-hour standards for PM 2.5 , setting an annual standard at a level of 15 micrograms per cubic meter (μg/m 3 ) and a 24-hour standard at a level of 65 μg/m 3 . 62 FR 38652. At the time the 1997 primary standards were established, EPA also established welfare-based (secondary) standards identical to the primary standards. The secondary standards are designed to protect against major environmental effects of PM 2.5, such as visibility impairment, soiling, and materials damage. On October 17, 2006, EPA revised the primary and secondary NAAQS for PM 2.5 . In that rulemaking, EPA reduced the 24-hour NAAQS for PM 2.5 to 35 μg/m 3 and retained the existing annual PM 2.5 NAAQS of 15 μg/m 3 . 71 FR 61236.

The CAA NSR program is a preconstruction review and permitting program applicable to certain new and modified stationary sources of air pollutants regulated under the CAA. The program includes a combination of air quality planning and air pollution control technology requirements. The CAA NSR program is composed of three separate programs: PSD, NNSR, and Minor NSR. PSD is established in Part C of title I of the CAA and applies in areas that meet the NAAQS “attainment areas” as well as areas where there is insufficient information to determine if the area meets the NAAQS— “unclassifiable areas.” The NNSR program is established in Part D of title I of the CAA and applies in areas that are not in attainment of the NAAQS— “nonattainment areas.” The Minor NSR program addresses construction or modification activities that do not quality as “major” and applies regardless of the designation of the area in which a source is located. Together, these programs are referred to as NSR programs. EPA regulations governing the implementation of these programs are contained in 40 Code of Federal Regulations (CFR) Parts 51.165, 51.166, 52.21, 52.24, and part 51, Appendix S.

Section 109 of the CAA requires EPA to promulgate a primary NAAQS to protect public health and a secondary NAAQS to protect public welfare. Once EPA sets those standards, states must develop, adopt, and submit a SIP to EPA for approval that includes emission limitations and other control measures to attain and maintain the NAAQS. See CAA § 110. Each SIP is also required to include a preconstruction review program for the construction and modification of any stationary source of air pollution to assure the maintenance of the NAAQS. The December 2, 2010, SIP submittal revises South Carolina's PSD and NNSR programs.

After EPA promulgated the NAAQS for PM 2.5 in 1997, the Agency issued a guidance document entitled “Interim Implementation of New Source Review Requirements for PM 2.5 .” John S. Seitz, EPA, October 23, 1997 (the “Seitz memo”). The Seitz memo was designed to help states implement NSR requirements pertaining to the new PM 2.5 NAAQS in light of technical difficulties posed by PM 2.5 at that time. Specifically, the Seitz memo stated: “PM-10 may properly be used as a surrogate for PM-2.5 in meeting NSR requirements until these difficulties are resolved.”

EPA also issued a guidance document entitled “Implementation of New Source Review Requirements in PM-2.5 Nonattainment Areas” (the “2005 PM 2.5 Nonattainment NSR Guidance”), on April 5, 2005, the date that EPA's PM 2.5 nonattainment area designations became effective for the 1997 NAAQS. This memorandum provided guidance on the implementation of the nonattainment major NSR provisions in PM 2.5 nonattainment areas in the interim period between the effective date of the PM 2.5 nonattainment area designations (April 5, 2005) and EPA's promulgation of final PM 2.5 NNSR regulations. Besides re-affirming the continuation of the PM 10 Surrogate Policy for PM 2.5 attainment areas set forth in the Seitz memo, the 2005 PM 2.5 NNSR Guidance recommended that until EPA promulgated the PM 2.5 major NSR regulations, “States should use a PM 10 nonattainment major NSR program as a surrogate to address the requirements of nonattainment major NSR for the PM 2.5 NAAQS.”

On May 16, 2008, EPA finalized a rule to implement the 1997 PM 2.5 NAAQS, including changes to the NSR program. 73 FR 28321. The 2008 NSR PM 2.5 Rule revised the NSR program requirements to establish the framework for implementing preconstruction permit review for the PM 2.5 NAAQS in both attainment and nonattainment areas. The 2008 NSR PM 2.5 Rule requires that major stationary sources seeking permits must begin directly satisfying the PM 2.5 requirements, as of the effective date of the rule, rather than relying on PM 10 as a surrogate, with two exceptions. The first exception is a “grandfathering” provision in the Federal PSD program at 40 CFR 52.21(i)(1)(xi). This grandfathering provision applied to sources that had applied for, but had not yet received, a final and effective PSD permit before the July 15, 2008, effective date of the May 2008 final rule. The second exception was that states with SIP-approved PSD programs could continue to implement the Seitz Memo's PM 10 Surrogate Policy for up to three years (until May 2011) or until the individual revised state PSD programs for PM 2.5 are approved by EPA, whichever comes first. For additional information on the NSR PM 2.5 Rule, see 73 FR 28321. 2

On February 11, 2010, EPA proposed to repeal the grandfathering provision for PM 2.5 contained in the federal PSD program at 40 CFR 52.21(i)(1)(xi) and to end early the PM 10 Surrogate Policy applicable in states that have a SIP-approved PSD program. 75 FR 6827. In support of this proposal, EPA explained that the PM 2.5 implementation issues that led to the adoption of the PM 10 Surrogate Policy in 1997 have been largely resolved to a degree sufficient for sources and permitting authorities to conduct meaningful permit-related PM 2.5 analyses. EPA has not yet taken final action on this proposal. Though EPA has not finalized a repeal of the PM 2.5 grandfathering provision at 40 CFR 52.21(i)(1)(xi), South Carolina elected not to include this provision in its SIP submittal.

The NSR PM 2.5 Rule also established the following NSR requirements to implement the PM 2.5 NAAQS: (1) Require NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) establish significant emission rates for direct PM 2.5 and precursor pollutants (including sulfur dioxide (SO 2 ) and NO X ); (3) establish PM 2.5 emission offsets; and (4) require states to account for gases that condense to form particles (“condensables”) in PM 2.5 emission limits. In addition, the NSR PM 2.5 Rule gives states the option of allowing interpollutant trading for the purpose of offsets under the PM 2.5 NNSR program. South Carolina's December 2, 2010, proposed submittal addresses the PSD and NNSR requirements related to EPA's May 16, 2008, NSR PM 2.5 Rule.

Today's proposed action on the South Carolina SIP also relates to EPA's Phase II Rule. 70 FR 71612 (November 29, 2005). In the Phase II Rule, EPA finalized regulations to address permit requirements for the 1997 8-hour ozone NAAQS to implement the NSR program by specifically identifying NO X as an ozone precursor.

On July 18, 1997, EPA promulgated a revised 8-hour ozone NAAQS of 0.08 parts per million—also referred to as the 1997 8-hour ozone NAAQS. On April 30, 2004, EPA designated areas as attainment, nonattainment and unclassifiable for the 1997 8-hour ozone NAAQS. As part of the 2004 designations, EPA also promulgated an implementation rule for the 1997 8-hour ozone NAAQS in two phases. Phase I of EPA's 1997 8-hour ozone implementation rule (Phase I Rule), published on April 30, 2004, effective on June 15, 2004, provided the implementation requirements for designating areas under subpart 1 and subpart 2 of the CAA (69 FR 23951).

On November 29, 2005, EPA promulgated the second phase for implementation provisions related to the 1997 8-hour ozone NAAQS—also known as the Phase II Rule (70 FR 71612). The Phase II Rule addressed control and planning requirements as they applied to areas designated nonattainment for the 1997 8-hour ozone NAAQS such as reasonably available control technology, reasonably available control measures, reasonable further progress, modeling and attainment demonstrations and NSR, and the impact to reformulated gas for the 1997 8-hour ozone NAAQS transition. The Phase II Rule requirements include, among other changes, a provision stating that NO X is an ozone precursor. 70 FR 71612, 71679. In the Phase II Rule, EPA stated as follows:

Pursuant to these requirements, states were required to submit SIP revisions adopting the federal requirements of the Phase II Rule (at 40 CFR 51.165 and 51.166) into their SIP no later than June 15, 2007. On July 1, 2005, South Carolina submitted a SIP revision to adopt the PSD and NNSR provisions amended in the 2002 NSR Reform rules. 3 The SIP revision became state-effective on June 24, 2005, and adopted PSD and applicable NNSR provisions at 40 CFR 51.165 and 51.166, respectively. Also in the July 1, 2005 submittal, South Carolina recognized NO X as an ozone precursor for NSR permitting purposes by adopting provisions into its SIP. At the time of South Carolina's NSR Reform SIP submittal, the Phase II Rule had not been finalized by EPA. However, the South Carolina NSR program had recognized NO X emissions as an ozone precursor in their PSD permitting practice. EPA took final action to approve South Carolina's NSR Reform SIP revision as well as NO X as a precursor provisions into the South Carolina SIP on June 2, 2008. 73 FR 31368. The December 2, 2010, proposed SIP revision (the subject of this action), incorporates a NO X as ozone precursor PSD requirement that was not included in the South Carolina's July 1, 2005, SIP submittal to be consistent with Federal regulations for NSR permitting purposes. Together, South Carolina's July 1, 2005 (73 FR 31368) and December 2, 2010, SIP revisions incorporate the Phase II Rule permitting requirements pertaining to NO X as an ozone precursor into the South Carolina SIP.

South Carolina currently has a SIP-approved NSR program for new and modified stationary sources. South Carolina's Regulation 61-62.5, Standard Number 7, contains the PSD preconstruction review program and Regulation 61-62.5, Standard Number 7.1 contains the permitting requirements for major sources in or impacting nonattainment areas (NNSR program). Today, EPA is proposing to approve changes to South Carolina's Regulation 61-62.5 to update South Carolina's existing NSR program to be consistent with current federal NSR regulations, including adopting regulations amended in the NSR PM 2.5 Rule and the Phase II Rule (at 40 CFR 51.165 and 51.166). More detail is provided below regarding EPA's analysis of the changes to South Carolina's SIP as provided in the December 2, 2010, SIP revision.

South Carolina's Regulation 61-62.5, Standards Number 7 and 7.1 adopt the provisions at 40 CFR 51.165 and 51.166, respectively, as amended by the promulgation of the NSR PM 2.5 Rule for PSD and NNSR. Specifically, South Carolina's December 2, 2010, proposed SIP revision addresses the following NSR PM 2.5 provisions: (1) Requirement for NSR permits to address directly emitted PM 2.5 and precursor pollutants; (2) significant emission rates for direct PM 2.5 and precursor pollutants (SO 2 and NO X ); and (3) requirement of states to address condensable PM in establishing enforceable emission limits for PM 10 or PM 2.5 . In light of EPA's February 11, 2010, proposed rulemaking to repeal the PM 10 “grandfathering” provision, as noted in Section II.C above, South Carolina's December 2, 2010, SIP revision does not address 40 CFR 52.21(i)(1)(ix) promulgated in the NSR PM 2.5 Rule. Even if EPA's proposed repeal of the PM 10 “grandfathering” provision is not finalized before today's action, South Carolina's SIP revision is approvable because it is at least as stringent as current federal law, and is consistent with section 110 of the CAA.

In addition, South Carolina's SIP revision does not incorporate optional provisions set forth at 40 CFR 51.165(a)(11) authorizing the use of interpollutant trading for the purpose of offsets under the PM 2.5 NNSR program. Because the NSR PM 2.5 Rule gives states discretion regarding whether to include interpollutant trading provisions in their PM 2.5 NNSR programs, South Carolina's decision not to adopt such provisions does not affect the approvability of South Carolina's December 2, 2010, draft SIP revision. EPA has preliminarily determined that South Carolina's December 2, 2010, draft SIP revision is consistent with the NSR PM 2.5 Rule for PSD and NNSR and with section 110 of the CAA. See, e.g., NSR PM 2.5 Rule, 75 FR 31514.

South Carolina's December 2, 2010, proposed SIP revision also updates its PSD permitting regulations at 61-62-5 Standard No. 7. The submittal adds the requirement related to NO X as an ozone precursor provision as amended in the Phase II Rule. Specifically, the change addresses the inclusion of “nitrogen oxides” in the footnote at 61-62.5(i)(5)(i) (as amended at 40 CFR 51.166(i)(5)(i)(e)) to recognize NO X as an ozone precursor. The provision at 40 CFR 51.166(i)(5)(i)(e) requires sources with a net increase of 100 tons per year or more of NO X to perform an ambient impact analysis.

As mentioned above in Section III, South Carolina submitted a SIP revision on July 1, 2005, to update its PSD and NNSR Regulations (at Regulation 61-62.5, Standards No. 7 and 7.1) to adopt the 2002 NSR Reform permitting requirements as well as incorporate provisions recognizing NO X as an ozone precursor. The SIP revision became state-effective on June 24, 2005 and EPA took final action to approve the SIP revision on June 2, 2008. 73 FR 31368. Together, South Carolina's July 1, 2005, SIP revision (73 FR 31368, June 2, 2008) and the December 2, 2010, SIP revision (the subject of today's action), incorporate into South Carolina's SIP (at Regulation 61-62.5, Standards No. 7 and 7.1) all of the requirements for permitting pertaining to NO X as an ozone precursor as required by the Phase II Rule, 70 FR 71612 (November 29, 2005). EPA is proposing to determine that South Carolina's December 2, 2010, SIP revision is consistent with the federal requirements of the Phase II Rule and the CAA.

EPA is proposing to approve South Carolina's December 2, 2010, SIP revision adopting federal regulations amended in the NSR PM 2.5 Rule and the Phase II Rule (recognizing NO X as an ozone precursor) into the South Carolina SIP. EPA has made the preliminary determination that this SIP revision is approvable because it is in accordance with the CAA and EPA regulations regarding NSR permitting.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this proposed action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 F43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this proposed rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

This is a synopsis of the Commission's Notice of Proposed Rule Making, MB Docket No. 11-33, adopted February 22, 2011, and released March 2, 2011. The full text of this document is available for public inspection and copying during normal business hours in the FCC's Reference Information Center at Portals II, CY-A257, 445 12th Street, SW., Washington, DC 20554. This document will also be available via ECFS ( http://www.fcc.gov/cgb/ecfs/ ). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) This document may be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone 1-800-478-3160 or via e-mail http://www.BCPIWEB.com. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY). This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden “for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

Provisions of the Regulatory Flexibility Act of 1980 do not apply to this proceeding. Members of the public should note that from the time a Notice of Proposed Rule Making is issued until the matter is no longer subject to Commission consideration or court review, all ex parte contacts (other than ex parte presentations exempt under 47 CFR 1.1204(a)) are prohibited in Commission proceedings, such as this one, which involve channel allotments. See 47 CFR 1.1208 for rules governing restricted proceedings.

For information regarding proper filing procedures for comments, see 47 CFR 1.415 and 1.420.

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 73 as follows: